Oil prices rise on hopes of Chinese stimulus and falling US inventories
Kyiv • UNN
Brent and WTI oil prices rose by 0.5-0.6% due to China's plans to issue $411 billion in bonds. An additional factor was a 3.2 million barrel reduction in US oil reserves.
Oil rose in price on Thursday amid weak holiday trade, driven by hopes for additional fiscal stimulus in China, the world's largest oil importer, and supported by an industry report showing a decline in US oil inventories, Reuters reports, UNN writes.
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The 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 steps up fiscal stimulus to revive the weakening economy.
Brent crude futures rose 39 cents, or 0.5%, to $73.97 per barrel at 10:15 GMT (12:15 Kyiv time). U.S. West Texas Intermediate crude was trading at $70.53, up 0.6%, or 43 cents, from its pre-Christmas level on Tuesday.
"I see two factors supporting oil prices. On the one hand, the support should come from the still insufficient supply on the market," said Giovanni Staunovo of UBS, referring to the prospect of lower US oil stocks in the official supply report on Friday.
"Additional support comes from expectations of further fiscal and financial stimulus in China," he said.
Satoru Yoshida, a commodities analyst at Rakuten Securities, said expectations of increased production and demand for fossil fuels after US President-elect Donald Trump takes office next month are also supporting oil prices.
The latest weekly report on US inventories from the American Petroleum Institute, an industry group, showed that crude oil stockpiles fell by 3.2 million barrels last week, market sources said on Tuesday.
Traders will be waiting to see if the official inventory report from the Energy Information Administration confirms the decline. The data is to be released later than usual due to the Christmas holidays. Analysts polled by Reuters expect crude oil inventories to fall by about 1.9 million barrels in the week to December 20, while gasoline and distillate stocks are expected to decline by 1.1 million barrels and 0.3 million barrels, respectively.
