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Oil prices edged higher on Thursday, gaining nearly 1% during light holiday trading, driven by optimism around potential fiscal stimulus measures in China, the world’s largest oil importer, and bolstered by a reported drop in U.S. crude stockpiles, according to Reuters.
China’s government is reportedly planning to issue 3 trillion yuan (approximately $411 billion) in special treasury bonds next year to invigorate its slowing economy, Reuters cited sources as saying earlier this week. The move is part of a broader effort to implement additional fiscal measures aimed at economic recovery.
By 1445 GMT, Brent crude futures climbed 48 cents (0.7%) to $74.06 per barrel, while U.S. West Texas Intermediate (WTI) crude rose 62 cents (0.9%) to $70.72. These increases reflect a combination of tightening market conditions and stimulus-driven demand expectations.
“I see two factors supporting oil prices. On the one hand support should come from a still undersupplied market,” said Giovanni Staunovo of UBS. “Additional support is coming from the expectation of further fiscal and monetary stimulus in China.”
The World Bank also revised its growth projections for China upward for 2024 and 2025, citing economic resilience. However, it cautioned that challenges, including weak confidence among businesses and households and issues in the property sector, may persist.
Satoru Yoshida, a commodity analyst at Rakuten Securities, highlighted that expectations for rising fossil fuel demand, underpinned by U.S. policy developments, are further strengthening oil prices.
In a separate development, shipping in Turkey’s Bosphorus Strait resumed on Thursday after being temporarily halted due to a tanker’s engine failure, as confirmed by the shipping agency Tribeca.
Adding to market dynamics, a report from the American Petroleum Institute indicated a 3.2-million-barrel reduction in U.S. crude inventories last week, according to market sources. Official data from the Energy Information Administration, expected at 1 p.m. EST (1800 GMT) on Friday, will provide further clarity. Analysts predict crude stocks fell by around 1.9 million barrels during the week ending December 20, with gasoline and distillate inventories also expected to decline by 1.1 million barrels and 0.3 million barrels, respectively.
