Oil Advances After China Announces Sweeping Support Measures

(Bloomberg) -- Oil rose after Chinese authorities unleashed a blitz of policy support for the economy, and a major Israeli strike on Hezbollah targets in Lebanon kept tensions high in the Middle East.

Brent crude rose above $74 a barrel after dropping 0.8% on Monday, with West Texas Intermediate near $71. People’s Bank of China governor Pan Gongsheng announced a series of stimulus measures at a briefing on Tuesday in Beijing, as policymakers made their broadest swing so far to hit this year’s annual growth target of about 5%.

Concerns over the flagging Chinese economy and the prospect of increased supplies from OPEC+ have combined to undermine oil prices, which are down by around 14% so far this quarter. The measures announced Tuesday — which include boosting banks’ lending to consumers and corporates and a cut to the PBOC’s key short-term interest rate — could support growth and energy demand in the world’s biggest oil importer.

“At the margin, this would be positive for China demand,” said Han Zhong Liang, an investment strategist from Standard Chartered Plc in Singapore. “The feed-through from lower rates to the real economy will be key from here.”

In the Middle East, Israel attacked targets across southern Lebanon, killing nearly 500 people in the deadliest day of strikes since its 2006 war with Hezbollah. Iran, which backs the group, had said earlier that it was prepared to de-escalate tensions.

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