By Nicole Jao
NEW YORK (Reuters) -Oil fell in light holiday trading on Thursday as dollar strength dashed hopes for additional fiscal stimulus in China, the world’s biggest oil importer.
futures fell 32 cents, or 0.43%, to $73.26 a barrel. U.S. West Texas Intermediate crude closed at $69.62, down 0.68% or 48 cents from Tuesday’s pre-Christmas settlement.
Chinese authorities have agreed to issue 3 trillion yuan ($411 billion) in special government bonds next year, Reuters reported on Tuesday, citing two sources, as Beijing steps up fiscal stimulus to revive a flagging economy.
“Injecting stimulus into a country’s economy creates greater demand, and greater demand pushes prices up,” said Tim Snyder, chief economist at Matador Economics.
The World Bank on Thursday raised its forecast for Chinese economic growth in 2024 and 2025, but warned that subdued household and business confidence, along with headwinds in the real estate sector, would continue to put pressure on it next year.
The US dollar continued to move higher after hitting a milestone last week. A stronger dollar makes oil more expensive for holders of other currencies.
The latest weekly report on U.S. inventories from the American Petroleum Institute industry group shows crude inventories fell by 3.2 million barrels last week, market sources said Tuesday.
Traders will wait to see if the official inventory report from the Energy Information Administration confirms the decline. The EIA data is due Friday at 1:00 PM EST (6:00 PM GMT), later than usual due to the Christmas holidays.
Analysts in a Reuters poll expect crude oil inventories to fall by about 1.9 million barrels in the week to December 20, while gasoline and distillates inventories will fall by 1.1 million barrels and 0.3 million barrels respectively.
Elsewhere, southbound traffic in Turkey’s Bosphorus was expected to resume on Thursday after being halted earlier in the day after a tanker suffered an engine failure, shipping agent Tribeca said.
($1 = 7.2975 renminbi)