By Alex Lawler
LONDON (Reuters) -Oil rose almost 1% 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 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.
futures rose 48 cents, or 0.7%, to $74.06 a barrel by 1445 GMT. U.S. West Texas Intermediate crude was at $70.72, up 0.9%, or 62 cents, from Tuesday’s pre-Christmas settlement.
“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 U.S. 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 U.S. President-elect Donald Trump takes office next month are also bolstering oil prices.
In other developments, 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.
The latest weekly report on U.S. 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 confirms the decline. The EIA data is due at 1 p.m. 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 gasoline and distillate inventories are seen falling by 1.1 million barrels and 0.3 million barrels respectively.
($1 = 7.2975 renminbi)
