Crude oil futures extended gains on Tuesday, after Beijing cut interest rates in an attempt to boost economic growth and halt a stock market rout.
On Tuesday the People’s Bank of China cut interest rates by 25 basis points to 4.6%. The one-year deposit rate will fall by 25 basis points to 1.75 percent.
Kallum Pickering, senior economist at Berenberg, said Tuesday's response sent a clear signal that Beijing, which has intervened several times this year to keep China's high-powered growth story on track, was still prepared to respond to market concerns, Reuters has reported.
London-traded Brent oil for October delivery added $1.28, or 3%, to trade at $43.97 a barrel during U.S. morning hours.
On Monday, Brent futures fell to $42.23, the lowest level since March 2009, before ending at $42.69, down $2.77, or 6.09%.
Nymex crude oil for delivery in October rose $1.30, or 3.41%, to trade at $39.55 a barrel.
A day earlier, New York-traded oil futures plunged to $37.75, a level not seen since February 2009, before closing at $38.24, down $2.21, or 5.46%.
Market players looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world’s largest oil consumer.
Later Tuesday, market players will await the American Petroleum Institute to release its inventories report. The government report due on Wednesday could show crude stockpiles rise by 2.2 million barrels in the week ended August 21.
In the meantime, the spread between the Brent and the WTI crude contracts stood at $4.42 a barrel, compared to $4.45 by close of trade on Monday.
Elsewhere, U.S. stocks
rebounded on Tuesday, partially recovering from the brutal
selloff during the previous session - also a response to China’s central bank cut of
interest rates.
The S&P 500 opened up 41 points, or 2.2%, to 1,934. The Dow Jones Industrial Average gained 364 points, or 2.2%, to 16,220 at the open. The Nasdaq Composite began the day up 131 points, or 3% at 4,660.
