China to Boost its economy
Oil rose for a third consecutive day on the strength of the belief that economic growth in China would receive a boost in the second half of this year, along with more sanctions announced on Iran by the United States. Brent crude future rose by 1.32% to close at USD $102.40, while the WTI future closed at USD $ 87.10, increasing by 1.18%.
There were speculations about a greater amount of stimulus from China to boost its economic output. An increase in economic activity would require an increased amount of oil, which was the primary reason behind the surge in oil futures.
According to the National Bureau of Statistics in China, the country’s economic growth was at 7.6 percent for the second quarter of 2012. The economic growth rate for the last quarter was at 8.1 percent, whereas the projected economic growth rate for the second quarter was at 7.7 percent. This has led to a growing belief in the market that there will be an increased amount of stimulus for the Chinese economy. This belief was further strengthened by the People’s Bank of China announcing that interests rates will be reduced for a second time in a month in July.
Furthermore, the US Treasury Department stated that it would freeze American assets of the National Iranian Tanker Co., and also block its transactions with the US financial system. The expected tightening of sanctions on Iran is expected to push the price of oil futures in the coming weeks.