Crude oil prices surged higher on Tuesday, buoyed by news that the Chinese government will provide more stimulus to revive the country’s growth that has slowed down significantly due to the impact of the ongoing trade war.
Supply cuts by OPEC and some non-OPEC members including Russia, and the drop in U.S. rig counts too pushed up crude oil prices.
Crude oil futures for February ended up $1.60, or 3.2%, at $52.11 a barrel.
On Monday crude oil futures for February ended down $1.08, or 2.1%, at $50.51 a barrel, extending losses to a second straight day, after having run up higher on nine successive sessions.
Oil’s slide yesterday was due to worries about slowing Chinese economy after data showed a shock contraction in the country’s exports due to the impact of trade war with the U.S.
Chinese finance ministry said today that it would implement larger tax and fee cuts to help reduce burdens for small firms and manufacturers.
Separately, Chinese central bank said that it would stick with its prudent monetary policy to support growth.
In December 2018, OPEC members and several non-OPEC countries, including Russia, had agreed to cut output by 1.2 million barrels per day from January 2019 to stem a sinking market and support their own economies.
Markets were looking ahead to weekly oil reports. The American Petroleum Institute will release its report later in the day, while the Energy Information Administration will come out with U.S. crude inventory data on Wednesday morning.
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