Investing.com - Crude oil futures extended strong gains on Tuesday, after China's central bank cut interest rates, as Beijing steps up efforts to boost economic growth and halt a stock market rout.
The People's Bank of China cut interest rates by 25 basis points to 4.6%. The bank also cut the reserve requirement ratio for large lenders by 0.5% to 18.0%.
Chinese equities have lost nearly 30% over the past two weeks amid growing fears over China's slowing economy.
The Asian nation is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Fears over a global economic downturn, led by a slowdown in China’s economy have intensified in recent days, accelerating a selloff in equities, commodities and emerging-market assets.
European and U.S. stock markets rebounded on Tuesday, but shares in China and Japan continued to slump.
On the ICE Futures Exchange in London, Brent oil for October delivery jumped $1.28, or 3%, to trade at $43.97 a barrel during U.S. morning hours.
A day earlier, London-traded Brent futures sank to $42.23, the lowest level since March 2009, before ending at $42.69, down $2.77, or 6.09%.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.
Elsewhere, crude oil for delivery in October on the New York Mercantile Exchange rose $1.30, or 3.41%, to trade at $39.55 a barrel.
On Monday, New York-traded oil futures tumbled to $37.75, a level not seen since February 2009, before closing at $38.24, down $2.21, or 5.46%.
Market players looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report Tuesday, while Wednesday’s government report could show crude stockpiles rose by 2.2 million barrels in the week ended August 21.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $4.42 a barrel, compared to $4.45 by close of trade on Monday.