Oil edges up on China stimulus hopes, US inventory drop
Business
Oil edges up on China stimulus hopes, US inventory drop
LONDON (Reuters) - Oil edged higher on Thursday in thin holiday trade driven by hopes for additional fiscal stimulus in China, the world's biggest oil importer, and supported by an industry report showing a decline in US crude inventories.
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 ramps up fiscal stimulus to revive a faltering economy.
"I see two factors supporting oil prices. On the one hand support should come from a still undersupplied market," said Giovanni Staunovo of UBS, citing the prospect of a drop in US crude inventories in Friday's official supply report.
"Additional support is coming from the expectation of further fiscal and monetary stimulus in China."
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.
Satoru Yoshida, a commodity analyst at Rakuten Securities, said expectations of increasing fossil fuel production and demand after US President-elect Donald Trump takes office next month are also bolstering oil prices.
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.
