HG MARKETS:

Oil prices extended their upward trajectory in Asian trading on Thursday, following the Christmas holiday, supported by new stimulus measures announced by China and a decline in U.S. crude inventories. Brent crude futures rose 0.2% to $73.71 per barrel, while West Texas Intermediate (WTI) crude futures similarly gained 0.2%, reaching $69.80 per barrel. Trading volumes are expected to remain subdued for the remainder of the holiday-shortened week. Earlier in the week, oil prices advanced over 1% on Tuesday, with further gains driven by reports of fresh economic stimulus from China.

Chinese authorities announced plans to issue a record 3 trillion yuan ($411 billion) in special treasury bonds for 2024, aiming to intensify fiscal efforts to bolster the economy, according to Reuters on Tuesday. Additionally, local officials in China have been granted greater latitude to expand investments using government bonds. Approval processes have been simplified, permitting projects unless explicitly restricted by a cabinet-published list, as outlined in a government document on Wednesday. As the world’s largest oil importer, China’s economic growth significantly influences global oil markets. Strong economic performance typically boosts crude demand to fuel industrial activity, transportation, and other energy-intensive sectors, exerting upward pressure on oil prices. However, China’s post-pandemic economic recovery has encountered challenges, including weakened consumer confidence, reduced export demand, and ongoing struggles in the property sector. To address these headwinds, Beijing has introduced a series of stimulus measures aimed at revitalizing growth.

In the United States, crude oil inventories declined by 3.2 million barrels for the week ending December 20, according to industry data released by the American Petroleum Institute (API) on Wednesday. Conversely, gasoline inventories increased by 3.9 million barrels, while distillate inventories—which include diesel and heating oil—decreased by approximately 2.5 million barrels. These figures precede official data from the Energy Information Administration (EIA), scheduled for release on Friday. A Reuters poll conducted earlier projected a 1.9 million-barrel decline in crude inventories for the week, alongside anticipated decreases of 1.1 million barrels in gasoline stocks and 0.3 million barrels in distillate inventories.