Crude-oil futures rose in Asian trade Monday after China announced a surprise cut in banks’ reserve requirements over the weekend.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in May CLK5, +1.56% traded at $56.45 a barrel at 0433 GMT, up $0.71 in the Globex electronic session. June Brent crude LCOM5, +1.21% on London’s ICE Futures exchange rose $0.65 to $64.10 a barrel.
Over the weekend, China’s central bank announced a surprise one-percentage-point cut in banks’ reserve requirement. The move came a few days after data showed China’s economic growth decelerated to 7% year-over-year in the first quarter, the slowest pace in six years.
The size and timing of this cut indicates the country’s leaders are more deeply concerned about the state of the economy than official comments previously indicated, Brian Jackson, China economist at IHS Global Insight, said. He said the move potentially unleashes 1.2 trillion yuan in new financing to prop up growth.
China is the world’s second-largest consumer of oil and the pace of its economic growth has a direct impact on its energy demand.
