Oil prices steady on hopes that output cuts will tighten supply

Oil prices have remained steady on hopes that production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC member Russia will tighten supply.

Brent crude oil futures increased six cents or 0.1% and were at $60.70 a barrel, while the West Texas Intermediate crude futures declined seven cents, or 0.13%, at $52.04 a barrel, Reuters reported.

Prices also steadied on expectations that possible Chinese stimulus might help the global economy.

Probis Securities Sydney chief investment officer Jonathan Barratt told the news agency: “It seems the oil market is looking at Saudi Arabia’s aggressive supply cuts and Chinese aggressive stimulus.”

China’s Central Bank injected $83bn in net cash into the country’s financial system in a bid to avoid a cash crunch that would put further pressure on the economy that is weakening.

The development hinted markets that authorities are shifting to a policy of easing to counter a slowdown in the economy.

Increasing signs of an economic slowdown in the country and worldwide may yet keep oil prices in check.

Earlier this week, China reported that its exports and imports contracted from a year earlier.

Meanwhile, based on estimates from White House, the US economy is taking a larger-than-expected hit from a partial government shutdown.

Standard Chartered Bank said: “OPEC production cuts will limit inventory builds to those justified by higher demand, which should settle the market in a sustainable range above $70 per barrel.”