WTI Rises Toward $70.00 on China Stimulus Hopes and New EU Sanctions Against Russia

West Texas Intermediate (WTI), the US crude oil benchmark, edged higher on Thursday, trading near $69.95. The price gains are driven by expectations of further Chinese economic stimulus and concerns over tighter global crude supplies stemming from new sanctions on Russia and Iran.

Heightened Geopolitical Risks

The Biden administration is reportedly exploring stricter measures against Russia’s oil trade to intensify pressure on the Kremlin. Meanwhile, the European Union approved another round of sanctions against Russia on Wednesday due to its ongoing war in Ukraine. These measures could lead to tighter global crude supply, providing upward momentum for WTI prices.

Optimism Around China’s Stimulus

WTI also benefited from rising expectations of additional stimulus measures from China, a major oil consumer. Chinese authorities recently announced plans for an “appropriately loose” monetary policy starting in 2025, marking the first shift of its kind in 14 years. This has fueled optimism in the oil market, with traders anticipating increased demand for crude as China’s economy accelerates.

Declining US Crude Inventories

Further supporting oil prices, the US Energy Information Administration (EIA) reported a decline in US crude stockpiles. Inventories fell by 1.425 million barrels in the week ending December 6, exceeding the market consensus of a 1.1 million-barrel decrease, though less steep than the previous week’s 5.073 million-barrel drop.

OPEC Revises Demand Forecasts

Offsetting some bullish sentiment, OPEC revised its global oil demand growth projections downward for 2024 and 2025 for the fifth consecutive month. “OPEC is grappling with the reality of slower demand growth and faces challenges in balancing the market as we head into 2025,” commented John Kilduff, partner at Again Capital.

Outlook

While the geopolitical landscape and Chinese policy developments continue to support WTI prices, headwinds from OPEC’s demand forecasts could temper gains. Near-term price movement will likely hinge on further data regarding crude inventories, geopolitical events, and the trajectory of China’s economic policies.