OIL FUTURES: Crude rises on hopes for further Chinese fiscal policies, awaiting US CPI data

Crude oil futures rose in mid-afternoon Asian trade Oct. 10 as the market awaited US consumer price index data for September, with high hopes for further Chinese fiscal stimulus.

At 3:48 pm Singapore time (0748 GMT), the ICE December Brent futures contract was up 42 cents/b (0.55%) from the previous close at $77.00/b, while the NYMEX November light sweet crude contract rose 47 cents/b (0.64%) at $73.71/b.

Analysts expected the US CPI for September to rise to 314.86 from 314.80 in August. Core consumer prices, excluding volatile items such as food and energy, are expected to increase by 0.2% month over month.

"A CPI data in line with expectations, or ideally softer-than-expected, will keep the expectation of another rate cut from the Fed in November alive," Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank said.

However, market analysts cautioned against expecting a 50 basis point cut owing to fear of re-introducing inflationary pressures to the market.

"We will unlikely see data soft enough to boost the expectation of a 50-basis point cut -- that expectation is rather boosted by the weakness of jobs data and the latest jobs data was too strong to hold on to it ... a sufficiently soft inflation figure will keep the expectation of another rate cut on the table for November."

Investors are also focused on upcoming announcements regarding further fiscal policies from China due on Oct. 12.

"After [the National Development and Reform Commission] press conference left many market participants underwhelmed, there has been an announcement of a Ministry of Finance briefing scheduled for 10 am GMT+8 on Saturday (Oct. 12) which should shape up to be an important event determining the direction of Chinese markets," ING market analysts said.

Current bullish sentiment in the crude complex continues to be informed by the potential for geopolitical escalation.

"The geopolitical risks remain tilted to the upside, and the excitement that China could announce a nice fiscal stimulus package this weekend, will likely throw a floor under any weakness in oil prices into the weekend," Ozkardeskaya added.

Coupled with tensions in the Middle East, the heightened risks of supply disruptions also exerted upward pressure on crude prices.

"US president Biden has sought to discourage [Israel from striking Iran's oil facilities], but there is growing concern that Israel's allies have little influence on its strategy," ANZ Research analysts Soni Kumari and Daniel Hynes said.

Additionally, supply-side concerns are emerging in the Gulf of Mexico.

"Hurricane Milton is shaping up to be the most destructive storm since 2022, prompting more oil companies to shut platforms and terminals ahead of its Wednesday night arrival," ANZ Research's Kumari and Hynes continued.

Dubai crude

Dubai crude swaps and intermonth spreads were mixed in mid-afternoon Asian trading Oct. 10 from the previous close.

The December Dubai swap was pegged at $74.99/b at 3:07 pm Singapore time (0707 GMT), down 72 cents/b (0.95%) from the previous Asian market close.

The November-December Dubai swap intermonth spread was pegged at 55 cents/b, up 1 cent/b over the same period, and the December-January intermonth spread was pegged at 39 cents/b, up 3 cents/b.

The December Brent-Dubai exchange of futures for swaps was pegged at $1.95/b, down 1 cent/b.