Oil prices saw an increase of 1% on Wednesday, driven by expectations that demand from China, the world’s largest importer of oil, would rise following Beijing’s new economic stimulus plans. By 1011 GMT, Brent crude futures had climbed by 75 cents, or 1.04%, reaching $72.94 a barrel, while U.S. West Texas Intermediate crude also rose by 75 cents, or 1.09%, to $69.34.
Beijing’s announcement on Monday to adopt a more relaxed monetary policy in 2025 aimed at stimulating the economy has heightened market optimism. This marks the first easing of China’s policy in 14 years. The focus of previous economic efforts had been on sectors such as electric vehicles and infrastructure, but analysts now anticipate that China may shift its focus towards policies designed to boost consumer spending. This shift is expected to drive higher oil consumption, leading to a more optimistic outlook for the oil market.
In November, China saw its crude oil imports increase for the first time in seven months, with a growth of more than 14% compared to the same period last year. This boost in imports is seen as a positive indicator of rising demand.
At the same time, the Kremlin reacted to reports that the U.S. government may be considering stricter sanctions on Russian oil. These sanctions are intended to exert further pressure on Russia, particularly as the U.S. approaches the possibility of a change in leadership. Bloomberg News reported that the Biden administration is exploring harsher measures against Russia’s oil industry, which could impact the Kremlin’s financial resources ahead of the upcoming U.S. presidential election. Analysts, however, speculated that the move might be aimed at influencing U.S.-Russia relations, particularly as speculation grows about how a potential Trump administration might handle the ongoing war in Ukraine.
On the U.S. domestic front, crude oil and fuel stocks increased last week, according to data from the American Petroleum Institute. Crude stocks rose by 499,000 barrels for the week ending on December 6, with gasoline inventories increasing by 2.85 million barrels and distillate stocks climbing by 2.45 million barrels.
Oil prices rose due to expectations of increased demand from China, alongside ongoing discussions about potential sanctions on Russian oil and rising U.S. crude stocks. These factors combined to fuel optimism in the oil market.
Union Jack Oil plc (LON:UJO) is an oil and gas company with a focus on onshore production, development, exploration and investment opportunities within the United Kingdom and the United States of America hydrocarbon sector.
