Oil reverses China-driven drop, rises on U.S. plan to refill SPR
BNN Bloomberg
Oil extended its rally for a fourth day, reversing course midday to climb after the Biden administration announced plans to replenish strategic reserves after completing maintenance work later this year.
West Texas Intermediate eked out a gain to settle above US$73 a barrel, recovering from a decline of as much as 2.5 per cent earlier in the session. Tuesday trading opened lower on news that China’s overall export growth slowed in April while imports plummeted, shaking the market’s confidence in demand. The U.S. decision to cancel the previously mandated sale of some 140 million barrels and begin purchasing crude later this year to refill the strategic cache halted the slide.
“The price is right for the U.S. to begin refilling their strategic oil reserve, providing a much needed bid for oil bulls as recessionary headwinds grow,” said Daniel Ghali, a commodity strategist at TD Securities.
Traders have been watching closely for news on when the U.S. would refill the reserves, which stand at a four-decade low. The administration had previously said it planned to restock the cache when oil prices fell to about $70.
