Oil prices were slightly down on Friday morning as investors looked at the possibility of economic stimulus efforts prompting a recovery in China.
Brent crude futures fell 12 cents to $73.24 a barrel while the US West Texas Intermediate (WTI) crude traded at $69.61, down 10 cents.
Chinese authorities this week agreed to issue 3 trillion Yuan ($411 billion) worth of special treasury bonds next year, two sources said, which would be the highest on record, as Beijing ramps up fiscal stimulus to revive a faltering economy.
The plan for 2025 sovereign debt issuance would be a sharp increase from this year’s 1 trillion Yuan, and it will come as China moves to soften the blow from an expected rise in U.S. tariffs on Chinese imports when Donald Trump takes office in January.
The proceeds will be used to boost consumption via subsidy programmes, equipment upgrades by businesses and funding investments in innovation-driven advanced sectors, among other initiatives.
Market analysts noted that injecting a stimulus into a nation’s economy creates increased demand, and increased demand pushes prices higher.
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.
The world’s second-biggest economy has struggled this year, mainly due to a property crisis and tepid domestic demand.
The World Bank sees China’s gross domestic product growth at 4.9 per cent this year, up from its June forecast of 4.8 per cent.
China revised upwards its 2023 gross domestic product estimate by 2.7% but also said the change would have little impact on growth this year.
The US Dollar continued to edge up higher after hitting a milestone last week. A stronger Dollar makes oil more expensive for holders of other currencies.
The latest weekly report on US inventories, from the American Petroleum Institute (API) industry group, showed crude stocks fell last week by 3.2 million barrels on Tuesday.
Traders will be waiting to see if the official inventory report from the Energy Information Administration (EIA) confirms the decline. The EIA data is due on Friday, later than normal because of the Christmas holiday.
