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Brent crude was up 47 cents or 0.6% at $76.56 a barrel at 0850
GMT. U.S. West Texas Intermediate (WTI) crude for July was down
13 cents from Friday's close at $71.65. The July contract
expires at the end of trade on Tuesday.
The more active WTI crude contract for August delivery was down
18 cents from Friday at $71.75 per barrel. There was no
settlement in the WTI contract on Monday due to a public holiday
in the United States.
China on Tuesday cut two benchmark lending rates by 10 basis
points each. The cuts, the first in 10 months, were less
aggressive than some forecasts.
"The rate cuts ... were widely expected, hence it did not offer
a bullish push to the oil markets," said Tina Teng, a markets
analyst at CMC Markets in Auckland.
"Oil traders may need to see a materialised strong economic
rebound in China to improve their outlook on oil demand," Teng
said.
The rate reductions follow recent economic data that showed
China's retail and factory sectors are struggling to sustain the
momentum seen earlier this year.
Still, China's 2023 crude oil demand is expected to rise 3.5% on
last year, a researcher at China National Petroleum
Corporation's (CNPC) research arm said on Tuesday.
The Chinese government met last week to discuss measures to spur
growth in the economy, and several major banks have cut their
2023 economic growth forecasts for China amid concerns its
post-COVID recovery is faltering.
On Monday, two policymakers at the European Central Bank argued
for more rate hikes amid risks of higher inflation. Markets also
await testimony from U.S. Federal Reserve Chair Jerome Powell
later in the week for future rate clues.
Higher interest rates reduce appetite for spending and can drive
down oil demand.
On the supply side, Iran's crude exports and oil output have hit
new highs in 2023 despite U.S. sanctions.
Russia is also set to increase seaborne diesel and gasoil
exports this month, outweighing cuts by the Organization of the
Petroleum Exporting Countries (OPEC) and its allies, including
Moscow itself.
(Reporting by Katya Golubkova in Tokyo and Andrew Hayley in
Beijing; editing by Kim Coghill and Jason Neely)
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