Investing.com — Oil prices fell Thursday, giving up early morning gains that followed growing hopes of new stimulus from China that could improve the demand outlook for crude.
At 1:58 PM ET (18:58 GMT), the price was trading 0.5% higher at $73.97 per barrel, and also rose 0.5% to $70.01 per barrel.
Volumes were expected to remain subdued for the remainder of the holiday-shortened week.
Oil prices rose more than 1% on Tuesday and rose further on Thursday after reports of new stimulus measures from China.
Hopes for stimulus from Fresh China are improving sentiment
Chinese authorities have decided to issue a record 3 trillion yuan ($411 billion) in special government bonds next year, in an intensified fiscal effort to stimulate a struggling economy, Reuters reported on Tuesday, citing unnamed sources.
In addition, China is allowing local officials to expand investments with key government bonds and simplify approvals, allowing projects unless restricted by a list published by the Cabinet, to better leverage public financing for economic growth, it showed on Wednesday a government document.
Hopes that China, the largest oil importer, can revive its economy remain crucial to the oil demand outlook at a time of oversupply concerns as non-OPEC will increase production.
Satoru Yoshida, commodities analyst at Rakuten Securities, noted that oil prices are also supported by expectations of higher production and demand for fossil fuels once newly-elected US President Donald Trump takes office next month.
US Crude Oil Stocks Shrink – API
US oil inventories fell by 3.2 million barrels in the week ended December 20, media reports showed on Wednesday, citing (API) data.
Gasoline inventories rose by 3.9 million barrels last week, while distillate inventories – including diesel and heating oil – fell by about 2.5 million barrels.
The figures anticipate data from the Energy Information Administration, the statistical division of the US Department of Energy, which is expected on Friday.
A Reuters poll forecast on Tuesday that crude oil inventories were likely to fall by about 1.9 million barrels in the week ending December 20, with gasoline inventories expected to fall by 1.1 million barrels and distillate inventories by 0.3 million barrels.
The report comes ahead of the Energy Information Administration’s official petroleum report due Friday, with economists forecasting a decline of 700,000 barrels for the week ending December 20.
Ayushman Ojha contributed to this report.
