Oil prices recorded slight gains on Thursday during subdued holiday trading, primarily driven by anticipation of additional fiscal stimulus measures in China and expectations of declining US crude inventories. Brent crude futures rose by 13 pence (0.2%) to reach £58.05 ($73.71) per barrel by 0650 GMT, while US West Texas Intermediate crude increased by 11 pence (0.2%) to £55.37 ($70.21) per barrel from Tuesday’s pre-Christmas settlement.
The Chinese government has announced plans to enhance fiscal support for consumption in the coming year through increased pension payments and medical insurance subsidies for residents, alongside expanded trade-in programmes for consumer goods. Moreover, Chinese authorities have reportedly agreed to issue special treasury bonds worth £324 billion (3 trillion yuan) in 2024, marking a significant fiscal stimulus package aimed at reinvigorating the nation’s economy.
Priyanka Sachdeva, senior market analyst at Phillip Nova, noted that crude oil price increases this week were primarily influenced by news of China’s unprecedented fiscal stimulus package. She also highlighted that decreasing US crude oil inventories, indicating robust demand, have provided additional support to prices.
Market sentiment has been further bolstered by expectations surrounding US President-elect Donald Trump’s upcoming administration, with Satoru Yoshida, a commodity analyst at Rakuten Securities, suggesting that anticipated increases in fossil fuel production and demand under Trump’s presidency are contributing to price support.
An extended poll released on Tuesday projected a decline of approximately 1.9 million barrels in crude inventories for the week ending 20 December. The survey also forecasted reductions in gasoline and distillate inventories of 1.1 million barrels and 0.3 million barrels, respectively. Market sources citing American Petroleum Institute figures on Tuesday confirmed decreases in both US crude oil and distillate stocks last week.
The Energy Information Administration, the statistical division of the US Department of Energy, is scheduled to release its latest data at 1800 GMT on Friday, which will provide further clarity on inventory levels.