Posted By Uma Rajagopal
Posted on December 26, 2024
By Yuka Obayashi and Emily Chow
TOKYO (Reuters) -Oil prices edged higher on Thursday in thin holiday trading, driven by hopes for additional fiscal stimulus in China, the world’s biggest oil importer, while an anticipated decline in U.S. crude inventories also provided support.
Brent crude futures rose 22 cents, or 0.3%, to $73.80 a barrel by 0450 GMT. U.S. West Texas Intermediate crude was at $70.34 a barrel, up 24 cents, or 0.3%, from Tuesday’s pre-Christmas settlement.
China plans to boost fiscal support for consumption next year by increasing pensions and medical insurance subsidies for residents and expanding trade-ins for consumer goods, according to a finance ministry announcement on Tuesday.
Meanwhile, Chinese authorities have agreed to issue 3 trillion yuan ($411 billion) worth of special treasury bonds next year, Reuters reported on Tuesday, citing two sources, as Beijing ramps up fiscal stimulus to revive a faltering economy.
“Crude oil prices have risen this week, driven by news that Chinese authorities are implementing a record-breaking 3 trillion yuan fiscal stimulus to boost their struggling economy,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“Additionally, a decrease in U.S. crude oil inventories, which indicates healthy demand, has also supported prices.”
Satoru Yoshida, a commodity analyst at Rakuten Securities, said expectations of increasing fossil fuel production and demand after U.S. President-elect Donald Trump takes office next month are also bolstering oil prices.
An extended Reuters poll showed on Tuesday that crude inventories are expected to have fallen by about 1.9 million barrels in the week to Dec. 20. Gasoline and distillate inventories are seen falling by 1.1 million barrels and 0.3 million barrels, respectively.
U.S. crude oil and distillate stocks fell last week, market sources said, citing American Petroleum Institute figures on Tuesday.
The latest data from the Energy Information Administration, the statistical arm of the U.S. Department of Energy, is due at 1 p.m. EST (1800 GMT) on Friday.
On the supply side, Libya’s National Oil Corp (NOC) said on Wednesday that the country’s average crude production in 2024 exceeded its target of around 1.4 million barrels per day.
($1 = 7.2975 Chinese yuan renminbi)
(Reporting by Yuka Obayashi in Tokyo and Emily Chow in Singapore; Editing by Jamie Freed)
