Oil prices edged higher on Thursday amid thin holiday trading, driven by optimism over potential fiscal stimulus in China and expectations of a decline in U.S. crude inventories.
Brent crude futures climbed 11 cents (0.2%) to $73.69 per barrel as of 0148 GMT, while U.S. West Texas Intermediate (WTI) crude increased by 15 cents (0.2%) to $70.25 per barrel, following Tuesday’s pre-Christmas settlement.
China, the world’s largest oil importer, announced plans to boost fiscal support for consumption in 2024. Measures include raising pensions and medical insurance subsidies and expanding trade-in programs for consumer goods. Additionally, Reuters reported that Chinese authorities plan to issue 3 trillion yuan ($411 billion) in special treasury bonds next year to stimulate the country’s slowing economy.
Read more: International Oil Prices Hit 2.5-Month Low
“Hopes for China’s stimulus measures are supporting the market,” noted Satoru Yoshida, a commodity analyst at Rakuten Securities. He also highlighted expectations of increased fossil fuel production and demand as additional factors lifting oil prices.
Market sentiment was further bolstered by forecasts of declining U.S. crude and fuel inventories. A Reuters poll predicted crude stocks would decrease by approximately 1.9 million barrels in the week ending December 20, with gasoline and distillate inventories also expected to drop by 1.1 million barrels and 0.3 million barrels, respectively.
The American Petroleum Institute’s preliminary data confirmed reductions in U.S. crude oil and distillate stocks last week, with the official Energy Information Administration (EIA) report set for release at 1 p.m. EST (1800 GMT) on Friday.
On the supply front, Libya’s National Oil Corporation (NOC) revealed that the country surpassed its crude production target for 2024, averaging over 1.4 million barrels per day.
The combination of China’s fiscal policies, U.S. inventory trends, and strong Libyan production highlights a dynamic market as the year draws to a close.
