SINGAPORE: Crude futures were little changed on Monday as moves by China to bolster its flagging economy failed to instill confidence that oil demand in the world’s largest energy consumer would keep growing quickly enough to absorb a global supply glut.
China cut interest rates for the third time in six months on Sunday to stoke its sputtering economy, which is headed for its worst year in a quarter of century.
“There’s been limited response in the oil markets today,” said Ric Spooner, chief analyst at CMC Markets in Sydney.
“The stimulus is probably seen as helping to soften a decline rather than really turn things around.”
Data on Friday showing record crude imports by China in April, now the world’s top importer after the United States, did not support oil prices either.
ANZ analysts said the imports in April were “likely in response to opportunistic buying and stockpiling”.
June Brent crude LCOc1 rose 5 cents to $65.44 a barrel by 0637 GMT (2.37 a.m. EDT) after dropping 1.6 percent last week.
June West Texas Intermediate (WTI) CLc1 dropped 6 cents to $59.33 a barrel after rising for eight straight weeks, the longest winning stretch since late 2012 to early 2013.
“While we expect a cyclical recovery in Brent over the next few years, we are not bullish near term,” Morgan Stanley analysts said in a note. “If prices recover too quickly, investment could return and undermine the recovery.”
Brent’s four-week advance to hit 2015 highs halted late last week as excess European and African crude supply dragged prices down, with a rally technically exhausted.
Further upward momentum in Brent prices could fade as differentials for Atlantic Basin crude relative to the Brent benchmark have declined to levels last seen in June 2014, Barclays analysts said in a note.
U.S. crude price gains may have encouraged shale producers to resume drilling again as they added rigs to the Permian Basin for the first time this year, oil services company Baker Hughes Inc (BHI.N) said on Friday.
But Societe Generale analyst Michael Wittner said in a note that months of U.S. crude output declines will come before drilling and production start to recover.
In Libya, oil production remained volatile after a protest closed the Nafoura oilfield, cutting output at Libya’s Arabian Gulf Oil Co (AGOCO) by some 35,000 barrels per day (bpd).