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Oil prices rose on Wednesday as market optimism grew regarding potential demand recovery in China, the world’s largest crude importer, following Beijing’s announcement of a significant monetary policy shift aimed at spurring economic growth.
Market Overview
- Brent Crude Futures: Up 24 cents (0.3%) to $72.43 a barrel by 0730 GMT.
- WTI Crude Futures: Increased by 24 cents (0.4%) to $68.83 a barrel.
This rise follows China’s announcement to adopt an “appropriately loose” monetary policy in 2025, marking the first such easing in 14 years.
China’s Role in Oil Demand
China’s new policy signals have renewed hopes for robust stimulus measures next year. According to Yeap Jun Rong, a market strategist at IG:
“Stronger policy signals from Chinese authorities have rekindled hopes for stimulus measures in 2025.”
However, market enthusiasm remains tempered as participants await detailed implementation plans.
In November, Chinese crude imports grew for the first time in seven months, up by over 14% year-on-year, underscoring a potential demand recovery. Yet, some experts, like Mukesh Sahdev of Rystad Energy, caution that while these policies may stabilize demand, they might not fully offset potential headwinds from trade measures proposed by U.S. President-elect Donald Trump.
U.S. Crude Inventories
Despite gains in oil prices, rising U.S. crude and fuel stocks present a counterbalance:
- Crude Stocks: Increased by 499,000 barrels last week, according to American Petroleum Institute (API) figures.
- Gasoline Inventories: Rose by 2.85 million barrels.
- Distillate Stocks: Increased by 2.45 million barrels.
The U.S. Energy Information Administration (EIA) is set to release official data later today, with analysts expecting:
- A 900,000-barrel decline in crude inventories.
- A 1.7 million-barrel increase in gasoline inventories.
While oil prices have found support from China’s policy shifts and improving demand signals, lingering uncertainties surrounding concrete policy details and potential geopolitical trade impacts could cap gains. Meanwhile, rising U.S. inventories add a bearish undertone to the market’s outlook.
