Oil prices rise on big draw in US stocks, China stimulus hopes

A pump is seen at a gas station in Manhattan, New York City, U.S., Aug 11, 2022. REUTERS/Andrew Kelly/File photo

TOKYO  – Oil prices rose on Thursday after data showed U.S. crude stockpiles fell more than expected last week, while the Chinese central bank’s cut in banks’ reserve ratio reinforced hopes of more stimulus measures and economic recovery.

The March contract for Brent crude gained 20 cents, 0.3 percent, to $80.24 a barrel as at 0128 GMT. U.S. West Texas Intermediate crude climbed 22 cents, or 0.3 percent, to $75.31 a barrel.

“A significant drop in the U.S. oil inventories and expectations of China’s economic recovery and more stimulus measures supported oil prices,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.

“Tensions in the Middle East were also behind buying,” he added.

U.S. crude stockpiles tumbled by 9.2 million barrels last week, the Energy Information Administration said, more than quadruple the 2.2 million-barrel draw analysts forecast in a Reuters poll.

READ: Oil prices flat as extreme cold’s hit to US output offsets China data

The draw was driven by a stark drop in U.S. crude imports as winter weather shut in refineries and kept motorists off the road.

U.S. crude output fell from a record-tying 13.3 million barrels per day (bpd) two weeks ago to a five-month low of 12.3 bpd last week after oil wells froze during an Arctic freeze.

China economy

Oil prices also drew support from hopes for China’s economic recovery.

China’s central bank announced a deep cut to bank reserves on Wednesday, in a move that will inject about $140 billion of cash into the banking system and send a strong signal of support for a fragile economy and plunging stock markets.

READ: China to cut banks’ reserve requirements to boost economy

China also said on Wednesday it is widening the uses for commercial property lending by banks in its latest effort to ease a liquidity crunch facing troubled real estate firms.

Meanwhile, geopolitical tensions in the Middle East remained in focus.

Maersk said explosions nearby forced two ships operated by its U.S. subsidiary and carrying U.S. military supplies to turn around when they were transiting the Bab al-Mandab Strait northbound accompanied by the U.S. Navy.

The U.S. military carried out more strikes in Yemen early on Wednesday, destroying two Houthi anti-ship missiles that were aimed at the Red Sea and were preparing to launch, the U.S. military said.