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By Bloomberg

Oil resumed its rally as China took steps to stimulate its economy and drillers in the U.S. reduced the number of active rigs to the fewest since November 2010.

Futures rebounded as much as 1.6 percent in New York after trimming a fifth weekly gain. China on Sunday announced the biggest cut to the amount of cash lenders must set aside as reserves since the global financial crisis after a report showed slowing economic growth. Rigs targeting oil in the U.S. decreased for a 19th week through April 17, according to Baker Hughes Inc.

Oil has surged 30 percent from a six-year low in March on signs the idling of active rigs is spurring a production slowdown that may alleviate a global supply glut. The price advance may still falter with U.S. crude inventories having swelled to the highest level in 85 years.

“The cut to reserve requirements in China is seen as a clear stimulus,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. “Oil markets are reacting to that quite strongly. Rig reductions and a modest pullback in production in the U.S. is certainly helping the scenario.”

West Texas Intermediate for May delivery, which expires Tuesday, rose as much as 90 cents to $56.64 a barrel in electronic trading on the New York Mercantile Exchange and was at $56.38 at 1 p.m. Singapore time. The more active June future climbed 70 cents to $58.02. Total volume was about 40 percent below the 100-day average. Prices are up 5.8 percent this year.

Rig Count

Brent for June settlement increased as much as 89 cents, or 1.4 percent, to $64.34 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $6.08 to WTI for the same month.

The reserve-requirement ratio for Chinese lenders will be lowered by 1 percentage point effective April 20, the People’s Bank of China said on its website. That’s the second reduction this year and the most since November 2008.

In the U.S., drillers cut the number of active machines by 26 to 734 last week, according to Baker Hughes, an oilfield- services company. The rig count has shrunk by 53 percent since Dec. 5 amid the slump in global oil prices.

Production slid to 9.38 million barrels a day through April 10, data from the Energy Information Administration showed. Stockpiles expanded to 483.7 million barrels, the highest level in weekly data compiled by the Energy Department’s statistical arm since August 1982. Monthly records dating back to 1920 show supplies haven’t been this high since 1930.

Bullish Bets

The U.S. and China are the world’s two largest oil consumers and will account for about a third of global demand this year, according to estimates from the Paris-based International Energy Agency.

Hedge funds boosted net-long positions on WTI by 9 percent in the week ended April 14 to the most since August, the U.S. Commodity Futures Trading Commission reported. Bets on falling prices dropped to the least since February.

Mexico will hedge its 2016 oil exports to protect against lower prices and the nation has little room to increase its debt to avoid spending cuts, Finance Minister Luis Videgaray said in an interview April 18.