OIL edged lower on Thursday (Dec 26) in light holiday trade as the US dollar’s strength offset hopes for additional fiscal stimulus in China, the world’s biggest oil importer.
Brent crude futures settled down 32 US cents, or 0.43 per cent, at US$73.26 a barrel. US West Texas Intermediate crude closed at US$69.62, down 0.68 per cent, or 48 US cents, from Tuesday’s pre-Christmas settlement.
Chinese authorities have agreed to issue three trillion yuan (S$558 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.
“Injecting a stimulus into a nation’s economy creates increased demand, and increased demand pushes prices higher,” said Tim Snyder, chief economist at Matador Economics.
The World Bank on Thursday raised its forecast for China’s economic growth in 2024 and 2025, but warned that subdued household and business confidence, along with headwinds in the property sector, would keep weighing it down next year.
The US dollar continued to edge up higher after hitting a milestone last week. A stronger US dollar makes oil more expensive for holders of other currencies.
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The latest weekly report on US inventories, from the American Petroleum Institute industry group, showed crude stocks fell last week by 3.2 million barrels, market sources said on Tuesday.
Traders will be waiting to see if the official inventory report from the Energy Information Administration (EIA) confirms the decline. The EIA data is due at 1 pm EST (1800 GMT) on Friday, later than normal because of the Christmas holiday.
Analysts in a Reuters poll expect crude inventories fell by about 1.9 million barrels in the week to Dec 20, while petrol and distillate inventories are seen falling by 1.1 million barrels and 0.3 million barrels respectively.
Elsewhere, southbound traffic in Turkey’s Bosphorus Strait was set to resume on Thursday, having been halted earlier in the day after a tanker suffered an engine failure, shipping agent Tribeca said. REUTERS
