Oil Prices Rise as US Crude Inventories Fall More Than Expected
Oil prices settled higher on Friday after data showed weekly US crude inventories fell more than expected. At 2:30 p.m. ET, WTI crude rose 1.2% to $74.17 a barrel, while Brent crude settled higher at $70.60 a barrel. Trading volumes were thin ahead of the new year’s start, with many institutional investors and traders taking time off during the holiday season.
The US Energy Information Administration (EIA) reported that US crude stockpiles for the week ended December 20 fell 4.2 million barrels, compared with expectations for a decline of just 700,000 barrels. This drawdown indicates a tightening supply in the US crude oil market, which has implications for global oil prices.
Gasoline inventories rose by 1.6 million barrels last week, while distillate inventories, which include diesel and heating oil, fell by about 1.7 million barrels. The report also showed that China, the world’s largest oil importer, is expected to issue a record-breaking 3 trillion yuan ($411 billion) in special treasury bonds next year to stimulate its struggling economy.
The outlook for oil demand hinges on the hope that China can revive its economy, especially as there are concerns about a potential oversupply due to expected increases in production from non-OPEC countries.