Oil prices climbed by more than 1% on Monday after China unveiled plans to adopt its first loosened monetary policy stance since 2010 as it looks to boost economic growth.
Brent crude for February delivery was up 1.52% to trade at $72.21 per barrel at 10.00 am ET while the WTI crude January contract gained 1.80% to $68.41 per barrel.
“The easing of monetary policy stance in China is likely the driver of the oil price rebounding, supporting risk sentiment,” UBS analyst Giovanni Staunovo said.
According to an official readout from a meeting of top Communist Party officials, Beijing plans to adopt a “moderately loose” monetary policy. Loosening policy includes central bank interventions such as increasing money supply, lowering interest rates, and implementing fiscal stimulus–all aimed at boosting economic activity.
“The development in Syria has added a new layer of political uncertainty in the Middle East, providing some support to the market,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting.”But Saudi Arabia’s price reductions and OPEC+’s production cut extension last week underscored weak demand from China, indicating the market may soften toward year-end,” he added.
Last week, OPEC+ delayed its planned output increase by three months to April 2025, and extended the full unwind of production cuts by a year until the end of 2026. The organization also unveiled several other key decisions including the extension of baselines for all countries by a year to end-2026. According to commodity analysts at Standard Chartered, the market has not priced in the full extent of how much oil has been removed from the plan. StanChart has pointed out that the previous plan for voluntary cut unwinds and the UAE target increase would have added a cumulative 496.3 mb to the market in 2025; however, the new schedules will now add just 191.3 mb, good for a 836 thousand barrels per day (kb/d) cut for the whole year.
