Dec 26 2024: Oil prices advanced slightly on Thursday in thin holiday trading, supported by optimism over potential fiscal stimulus in China and expectations of a decline in U.S. crude inventories.
By 0650 GMT, Brent crude futures rose 13 cents (0.2%) to $73.71 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 11 cents (0.2%) to reach $70.21 per barrel.
China’s Fiscal Stimulus Plans Boost Market Sentiment
China, the world’s largest oil importer, announced plans to bolster its economy by increasing pensions and medical insurance subsidies for residents. The government also intends to expand trade-ins for consumer goods to stimulate domestic consumption, according to the Ministry of Finance.
In a significant move, Chinese authorities have agreed to issue 3 trillion yuan ($411 billion) worth of special treasury bonds in 2024, marking a record fiscal stimulus initiative aimed at reviving the faltering economy.
“News of China’s record-breaking fiscal stimulus has been a key driver for crude oil prices this week,” noted Priyanka Sachdeva, senior market analyst at Phillip Nova.
U.S. Inventory Data Signals Strong Demand
Expectations of a drop in U.S. crude oil inventories further supported prices. An extended Reuters poll predicted that inventories fell by about 1.9 million barrels for the week ending December 20, while gasoline and distillate stocks were also expected to decrease by 1.1 million and 0.3 million barrels, respectively.
Market sources citing American Petroleum Institute (API) data confirmed declines in U.S. crude and distillate inventories last week. Official data from the Energy Information Administration (EIA) is expected on Friday at 1 p.m. EST (1800 GMT).
Supply-Side Developments
On the supply front, Libya’s National Oil Corporation (NOC) announced on Wednesday that its average crude production for 2024 surpassed its target of 1.4 million barrels per day.
Additional Market Influences
Satoru Yoshida, a commodity analyst at Rakuten Securities, highlighted that expectations of increased fossil fuel production and demand under the incoming U.S. administration were also contributing to the positive sentiment in oil markets.
With ongoing stimulus efforts in China and stable demand indicators in the U.S., oil markets may continue to find support in the near term.
