Investing.com — Oil prices edged higher on Friday after data showed weekly inventories fell more than expected.
At 2:30 PM ET (19:30 GMT), the price rose 1.2% to $74.17 per barrel, ending higher at $70.60 per barrel.
Trading volumes were thin ahead of the start of the new year as many institutional investors and traders typically take time off during the holidays. In addition, year-end profit taking and portfolio rebalancing reduce trading activity.
US crude oil inventories are falling more than expected
The U.S. Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, reported Friday that crude inventories for the week ended Dec. 20 fell by 4.2 million barrels, compared with expectations for a decline of just 700,000 barrels.
This decline signals tighter supply in the US crude oil market, which has implications for global oil prices. Following the API report, oil prices rose, supported by hopes of additional fiscal stimulus in China and the reported decline in US crude inventories.
Gasoline inventories rose by 1.6 million barrels last week, while distillate stocks – including diesel and heating oil – fell by about 1.7 million barrels.
Hopes for stimulus measures from China remain
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.
In addition, China is allowing local officials to expand investments with key government bonds and simplify approvals to better use government financing for economic growth, a government document showed on Wednesday.
On Thursday, the World Bank revised upward its economic growth forecast for China for 2024 and 2025, but warned that weak household and business confidence, combined with challenges in the real estate sector, would continue to hamper growth in the coming year.
The outlook for oil demand hinges on hopes that China, the world’s largest oil importer, can revive its economy, especially as concerns exist about possible oversupply due to expected production increases from non-EU OPEC countries.
Ayushman Ojha contributed to this report.
