Oil prices climb amid China’s monetary policy adjustments
Onome Amuge
Crude oil traded higher on Wednesday, driven by market speculation that the world’s largest oil importer, China, is on track for a boost in demand due to Beijing’s recent monetary policy easing, which aims to spur economic growth.
Prices of Brent crude futures rose by 24 cents, or 0.3 percent, to $72.43 a barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 24 cents, or 0.4 percent, to $68.83, buoyed by expectations of increased demand from China.
This price movement came on the heels of China’s announcement on Monday that it would adopt an “appropriately loose” monetary policy in 2025, signaling a change in its economic stance after 14 years of maintaining a neutral policy.
Market strategist at IG, Yeap Jun Rong, observed that oil prices have recently been propped up, with stronger policy signals from Chinese authorities rekindling hopes for more vigorous stimulus measures in 2025.
He, however, cautioned that the positive sentiment is still restrained as investors await more definitive details beyond the typical positive messaging.
The optimism in the oil market is somewhat tempered by lingering uncertainty about the concrete details and the extent of the policy shift in China, as investors remain cautious in their optimism, awaiting a clearer indication of the direction that Chinese policymakers intend to take.
Chinese crude imports grew 14 percent in November from a year earlier, marking the first increase in seven months, buoying the market sentiment about Chinese demand for oil.
However, Mukesh Sahdev, head of oil analysis at Rystad Energy, warned that China’s policy changes might not be able to fully mitigate the potential adverse impact of the trade measures proposed by President-elect Donald Trump, saying that this can only help prevent further downsides at best.
Adding to the market dynamics, the American Petroleum Institute (API) reported on Tuesday that crude oil and fuel inventories in the U.S. rose last week, as reported by market sources under the condition of anonymity.
According to the API figures, crude oil stocks increased by 499,000 barrels during the week ending December 6, while gasoline inventories expanded by 2.85 million barrels, and distillate stocks also rose by 2.45 million barrels, further contributing to the market’s assessment of the overall balance of supply and demand in the U.S.