Oil jumped nearly 2% on Tuesday before paring gains after China announced its biggest stimulus package since the early days of the pandemic, raising prospects of increased demand.
On Tuesday, West Texas Intermediate (CL=F) rose to trade above $71 per barrel. Brent (BZ=F), the interventional benchmark price, also gained to hover north of $75.
The People’s Bank of China unveiled a new stimulus package aimed at revitalizing the nation’s economy, which is suffering from deflation and a slumping real estate market.
“Stalled Chinese growth has been one of the primary banes of the oil market all year,” OPIS global head of energy analysis Tom Kloza told Yahoo Finance.
Oil prices have been volatile this month. WTI rebounded more than 4% last week amid lingering production shut-ins.
A jumbo rate cut announcement by the Federal Reserve helped buoy crude markets on the prospects of growing economic activity.
Escalating tensions in the Israel war against Hamas and Iran-backed Hezbollah militants also put upward pressure on oil.
On Monday, prices pulled back after Iran’s president said he’s ready to deescalate tensions with Israel if the other side agreed to the same. Iran produces roughly 3 million barrels of oil a day.
Meanwhile, the looming threat of tropical storm Helen, expected to reach hurricane status, appears to be headed toward the coast of Florida and is expected to make landfall on Thursday.
“The Hurricane looks to be a demand-destroyer and not a supply destroyer and indeed our private OPIS data is suggesting that gasoline demand is down perhaps a few percentage points from last year,” said Kloza.
Gasoline prices, which have been on downward trend, hovered around $3.21 per gallon on Tuesday, roughly $0.64 lower than a year ago, according to AAA data.
Prices at the pump are expected to fall further as gas stations sell a cheaper winter blend. More oil is expected to enter the market if OPEC+ starts to unwind some of its production cuts during the last month of the year.
“I still very much believe that we will see sub-$3/gal gasoline in October, November and December,” said Kloza.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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