Oil Prices Steady as Hopes for China Stimulus Fade and U.S. Crude Stockpiles Decline

By Laila Kearney

Oil prices stabilized on Wednesday following a rise in the previous session, as enthusiasm for China’s economic stimulus began to wane. This is significant for the world’s largest crude importer, yet a report indicating a decline in oil and fuel inventories provided some support to the market.

Brent crude futures saw a modest increase of 3 cents, reaching $75.20 a barrel by 0004 GMT, while U.S. West Texas Intermediate crude experienced a slight decrease, losing 2 cents to settle at $71.58 per barrel.

On Tuesday, prices jumped approximately 1.7% after China unveiled its most aggressive economic stimulus measures since the COVID-19 pandemic, which included interest rate cuts and government funding. However, analysts cautioned that further fiscal support would be necessary to bolster confidence in the second-largest global economy, which lessened the initial bullish response in oil prices.

Despite this, the decline in U.S. crude oil and fuel stockpiles helped to sustain the market, contributing to a general upward trend since prices reached their lowest level since 2021 on September 10.

According to market sources referencing American Petroleum Institute data, U.S. oil inventories fell by 4.34 million barrels last week, alongside decreases in gasoline inventories of 3.44 million barrels and distillate stocks by 1.12 million barrels.

Additionally, escalating tensions in the Middle East between Iran-backed Hezbollah in Lebanon and Israel have lent support to crude prices, with exchanges of cross-border rockets fueling concerns about a wider conflict in this crucial oil-producing region.

Hezbollah recently confirmed the death of senior commander Ibrahim Qubaisi due to Israeli airstrikes in Beirut. Israel had previously stated that Qubaisi led the group’s missile and rocket forces.

Meanwhile, a hurricane that posed a threat to the U.S. Gulf Coast has shifted its path toward Florida, moving away from oil and gas production areas in Texas, Louisiana, and Mississippi.