SINGAPORE: Oil prices rose further in Asia on Friday following recent sharp losses, lifted by a recovery in Chinese stocks as the government beefed up measures to support the market.
The rebound, which followed a 30 percent plunge in Chinese share prices, eased concerns of a wider fallout across the world’s second biggest economy and top energy consumer, but analysts said it remained to be seen whether the rally will be sustained.
US benchmark West Texas Intermediate for August delivery climbed 55 cents to $53.33 and Brent crude for August advanced 62 cents to $59.23 a barrel in afternoon trade.
Both contracts ended higher on Thursday.
“There are some signs that foreign investors are more optimistic about China’s efforts to arrest the stock slide,” said Bernard Aw, market strategist at IG Markets in Singapore.
“However, I feel much caution should be exercised and it is important to observe the Chinese markets in the coming sessions before calling it a bottom,” he said in a market commentary.
“As we have seen in the past, Chinese equities may recover in one session, only to fall straight back into a downward spiral the next day.”
There were also hopes debt-strapped Greece would reach a deal with its creditors after Athens late Thursday laid out details of a new bailout plan to save the country from financial collapse.
The package involves a pensions overhaul and tax hikes in return for debt relief and a rescue loan from the eurozone.
Traders are also keeping an eye on negotiations in Vienna between western powers and Iran on a deal to curb Tehran’s nuclear ambitions and allow the lifting of punishing sanctions.
Global powers leading the negotiations sought to ramp up the pressure for a deal, but Iranian Foreign Minister Mohammad Javad Zarif hit back, saying Western countries among the so-called P5+1 group on the other side of the talks were backtracking on previous commitments.
A lifting of sanctions will allow Iranian oil to flow back into the global market, adding to a supply glut and helping depress prices, according to analysts.
Meanwhile, the International Energy Agency (IEA) forecast on Friday that global oil demand growth would slow in 2016 and that oil production in nations outside the Organization of the Petroleum Exporting Countries (OPEC) would stall.
In its first estimates for 2016, the IEA forecast that oil demand would slow next year to 1.2 million barrels per day, compared with an average of 1.4 million barrels per day this year.
Growth in non-OPEC oil supply “is expected to grind to a halt in 2016 as lower oil prices and spending cuts take a toll,” the IEA said in its monthly oil report.