Oil prices rise on China stimulus, rate hike expectations.

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Oil prices rose to their highest level in 10 months on Friday, supported by expectations that major global interest rate hike cycles were nearing their end and China’s move to boost its economic recovery.

Brent crude rose 46 cents, or 0.5%, to $94.16 a barrel, while U.S. West Texas Intermediate (WTI) crude was up 0.6% at $90.74 a barrel. Both benchmarks were trading at their highest levels since November.

Analysts said China’s move to cut banks’ reserve requirements was instrumental in lifting energy and industrial metal prices in general. The reserve requirement cut is expected to free up about 1.2 trillion yuan ($174 billion) in liquidity for the Chinese economy.

Persistent worries about supply, and expectations of the U.S. central bank holding rates after Europe hinted its Thursday hike would be its last, have also supported oil prices.

“Betting on oil is becoming a favorite trade on Wall Street,” said Edward Moya, senior market analyst at OANDA. “No one is doubting the OPEC+ decision at the end of last month will keep the oil market very tight in the fourth quarter.”

The International Energy Agency (IEA) said this week it expects Saudi Arabia’s and Russia’s extended oil output cuts to result in a market deficit through the fourth quarter.

Prices briefly pulled back on a bearish U.S. inventories report, but soon resumed their ascent as supply worries prevailed. The U.S. Energy Information Administration said crude inventories fell by 4.8 million barrels last week, but gasoline inventories rose by 2.6 million barrels.

Oil prices are expected to remain volatile in the near term, as traders weigh the impact of supply and demand factors. However, the underlying trend is still bullish, as global demand is expected to continue to grow.


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