Oil Rises on China Stimulus Hopes, US Inventory Drop

Oil rose almost 1% on Thursday in thin holiday trade driven by hopes for additional fiscal stimulus in China, the world's biggest oil importer, and supported by an industry report showing a decline in U.S. crude inventories.

Chinese authorities have agreed to issue 3 trillion yuan ($411 billion) worth of special treasury bonds next year, Reuters reported on Tuesday, citing two sources, as Beijing ramps up fiscal stimulus to revive a faltering economy.

Brent crude futures rose 48 cents, or 0.7%, to $74.06 a barrel by 1445 GMT. U.S. West Texas Intermediate crude was at $70.72, up 0.9%, or 62 cents, from Tuesday's pre-Christmas settlement.

"I see two factors supporting oil prices. On the one hand support should come from a still undersupplied market," said Giovanni Staunovo of UBS, citing the prospect of a drop in U.S. crude inventories in Friday's official supply report.

"Additional support is coming from the expectation of further fiscal and monetary stimulus in China."

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, along with headwinds in the property sector, would keep weighing it down next year.

Satoru Yoshida, a commodity