Brent crude oil futures for November 2024 reached $74.72 (+1.11%) per barrel on the Intercontinental Exchange (ICE). The price of WTIcrude oil intended for export in November increased by 1.28% to $71.27 per barrel on the New York Mercantile Exchange (NYMEX).
At the same time, the price of Azeri Light (CIF) oil settled at 83.41 (+ 0.71%) on world markets.
Last Monday, oil prices were responding more to European economic data than to the potential disruption of oil supply from the Gulf of Mexico or intensifying conflict developments in the Middle East.
On Monday, Brent crude was trading down 0.59% at $74.05, while the U.S. crude benchmark, WTI, was trading down 0.47% at $70.53.
Market prices are getting stabilized amid monetary easing of the central banks of the world's leading economies, anticipating an improvement in their macroeconomic data and economic growth.
Thus, after a two-day meeting held on September 17-18, the US Federal Reserve (FED) lowered the federal funds rate by 50 basis points to a range of 4.75%-5.0%, says the press release of the regulator. It was the FED’s first rate cut in more than four years – since March 2020.
The benchmark rate in the USA was kept steady at a 23-year high of 5.25% to 5.5% between July 2023 and August 2024. The FED also presented new macroeconomic forecasts. In particular, inflation is now expected to reach 2.3% by the end of 2024, against 2.6%, according to the June forecast. In 2024, the FED expects GDP growth to be 2% (it was 2.1% in June). The median projection for the federal funds rate showed 4.4% for this year, down from a 5.1% projection made in June. The median projection for the federal funds rate stood at 3.4% for 2025, down from a previous estimate of 4.1%.
Several other major central banks have also eased monetary policy. On Thursday, the ECB lowered its deposit rate by 25 basis points. Half of the 10 big developed market central banks tracked by Reuters have now started easing policy, including the central bank of Switzerland, Canada and England.
Today, September 24, China's central bank has unveiled a broad package of monetary stimulus measures to revive the world's second-largest economy, including the RRR cut - the amount of cash that banks are required to hold as reserves, as well as lowering of the key interest rate.
At the press conference held in Beijing, the Governor of the People's Bank of China (PBC) Pan Gongsheng announced that China would cut the reserve requirement ratio and its discount rate.
The reserve requirement ratio (RRR) will be cut by 0.5 percentage points in the near future, providing about 1 trillion yuan (128 billion EUR) in long-term liquidity to the financial market, he said.
The central bank will also reduce «mortgage interest rates» to a level similar to those of newly issued housing loans. This growth-boosting sector has been overlooked as the central government has decided to shift the focus of economic growth from real estate to high technology and manufacturing.
These measures of the central bank will "encourage commercial banks to reduce interest rates on their mortgage loans to a level close to the interest rates on new loans," he added.
A year and a half after the lifting of health measures due to the new coronavirus pandemic which caused a lot of problems in the economy of the Asian giant, the recovery that many hoped for turned out to be short-lived and less strong than expected.
Thus, the country is still facing a crisis in the real estate sector, rising youth unemployment and low household consumption.
Foreign sources note that the People's Bank of China has stepped up easing measures to cope with the pressure of the economic downturn, butit still needs strong financial support. In particular, government experts stand for launching a 10 trillion yuan incentive plan, which may bedecided at the Central Economic Working Conference in December. The real estate crisis has been lasting in China for more than 5 years, as aresult of which, according to Bloomberg, GDP for the year of 2024 may be less than the established target of 5%. In the near term, expectations of low oil demand in China will serve as a balance of the above-mentioned risks - conflicts and storms - until the end of 2024, and prices are likely to stay within the regulation of the world's leading economies to ensure their sustainable growth and corresponding demand for hydrocarbons.
