Oil News: China’s $411B Stimulus to Drive Oil Demand and Price Growth

Prices Rise on Technical Breakout and Global Demand Signals

Crude oil futures are advancing this week as traders capitalize on a breakout above the 50-day moving average (MA) at $69.09, reinforcing bullish sentiment. Additional support is seen at $68.69, with resistance building at $71.02-$71.10. A sustained push beyond this zone could open the path toward the 200-day MA at $72.43, signaling a shift in long-term market direction.

At 11:39 GMT, Light Crude Oil futures are trading $69.92, up $0.68 or +0.98%.

U.S. Economic Data and Inventory Draws Support Oil Prices

Strength in U.S. economic indicators continues to drive oil demand expectations. A sharp increase in November capital goods orders highlights industrial resilience, while stronger new home sales reflect healthy consumer activity. As the leading global oil consumer, robust U.S. economic performance is a key catalyst for sustained crude demand.

Crude stockpiles are also drawing market attention, with the American Petroleum Institute (API) projecting a 2-million-barrel inventory decline. If confirmed by the Energy Information Administration (EIA) on Friday, this would reinforce tightening supply expectations, lending further upside to prices as the year ends.

India’s Rising Crude Imports Strengthen Demand Outlook

India’s crude oil imports rose 2.6% in November, reaching 19.07 million metric tons, driven by expanding economic activity and increased travel. As the third-largest oil importer globally, India’s accelerating demand plays a pivotal role in supporting prices, helping offset weaker consumption trends in other regions. This reinforces a broader narrative of strengthening Asian demand.

China’s $411 Billion Stimulus Fuels Commodity Markets

China’s announcement of a $411 billion bond issuance for 2025 is adding further bullish pressure to global commodities. This stimulus package targets infrastructure development, electric vehicle expansion, and bank recapitalization, underlining China’s effort to counter slowing growth and trade uncertainties. The anticipated surge in raw material demand is expected to lift oil prices alongside broader commodities.

Markets responded positively, with Chinese equities rising and commodity prices firming. However, bond yields edged higher as investors weighed the impact of increased debt issuance. Despite this, China’s fiscal measures remain a critical bullish factor as 2024 approaches, reinforcing optimism in energy markets.

Market Forecast

Crude oil is poised for upside, with prices expected to consolidate between $69 and $71 in the short term. A breakout above $71.10 could drive a rally toward the 200-day MA at $72.43. With tightening U.S. inventories, growing Indian demand, and aggressive Chinese fiscal expansion, the outlook for crude oil remains bullish. Traders should monitor inventory data closely, as further supply draws could accelerate price momentum heading into the new year.

More Information in our Economic Calendar.