Oil prices defend gains as output dips, China boosts consumption

By Henning Gloystein
SINGAPORE, March 1 (Reuters) - U.S. crude oil prices were
steady in early Asian trading on Tuesday after lower domestic
production as well as dipping output from OPEC tightened the
market just as China further eased its monetary policy in a bid
to boost consumption.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were
trading at $33.79 per barrel at 0018 GMT, 4 cents above their
last settlement. That was up 30 percent from Feb. 11, when the
contract hit a 2016 low of just over $26 a barrel, a level last
seen in 2003.
Analysts said that prices were being pushed by hopes that
aggressive Chinese monetary policy easing would boost demand
while at the same time oil output was dipping in the United
States and also the Organization of the Petroleum Exporting
Countries (OPEC).
China, the world's largest energy consumer, cut its reserve
requirement ratio, the amount of cash banks must hold as
reserves, for a fifth time in a year, injecting an estimated
$100 billion worth of long-term cash into the economy to cushion
the pain from job layoffs and bankruptcies in industries plagued
by overcapacity.
"The Chinese latest rate cut may provide a short term boost
to sentiment towards some commodities," ANZ bank said on
Tuesday.
"Crude oil prices continue to rise. WTI prices closed at
what we see as a key level of $34 per barrel - a breakout above
this will add to the view for some that the bottom in the crude
oil market is now in place," it added.
The rising prices were a result of a dip in supplies.
U.S. government data showed crude oil output last December
fell for a third straight month by 43,000 barrels per day (bpd)
to 9.26 million bpd, its lowest in a year.
Supply from OPEC has also declined, falling by 280,000 bpd
between January and February to 32.37 million bpd, according to
a Reuters survey based on shipping data and information from
sources at oil companies, OPEC as well as from consultants.