Oil prices were largely muted on Thursday as traders digested a storm of factors, including more U.S. oil sanctions, fresh stimulus measures in China and a dour outlook on oil demand from the OPEC.
Prices steadied after rising sharply in the prior session on expectations of tighter global supplies, after the U.S. was seen preparing more oil sanctions against Russia. Prices were also sitting on gains made after top importer China signaled more incoming economic support earlier this week.
At 09:04 PM ET (0204 GMT), Brent Oil Futures ticked slightly lower to $73.50 a barrel, and Crude Oil WTI Futures fell 0.1% to $69.79 a barrel.
Both contracts, set to expire in February, had surged more than 2% on Wednesday.
This was despite the Organization of the Petroleum Exporting Countries, known as OPEC, cutting its forecasts for oil demand growth in 2024 and 2025, on Wednesday, its fifth consecutive downward revision.
Meanwhile, U.S. Treasury Secretary Janet Yellen stated on Wednesday that a weaker global oil market could present a chance for additional action against Russia's energy sector, as the U.S. continues to work to hinder Moscow's ability to wage war against Ukraine.
China stimulus, Middle East tensions keep oil prices higher
Oil was supported by hopes of fresh stimulus measures from the world’s biggest oil importer, after the start of China’s annual economic policy meeting Central Economic Work Conference (CEWC) on Wednesday.
The Chinese government pledged to loosen monetary policy and enact more targeted stimulus measures to boost economic growth, the country's Politburo signaled earlier this week.
Oil prices also retained a higher risk premium amid rising tensions in the Middle East, after Syria’s rebel forces toppled the government, earlier this week, and took control of Damascus.
Syrian rebel leader Ahmad al-Sharaa - better known as Abu Mohammed al-Golani will dissolve the security forces of the toppled regime of Bashar al-Assad, he told told Reuters in a written statement on Wednesday.
Markets mull over US CPI, crude inventories
The U.S. consumer price index, released on Wednesday was in line with expectations, and cemented bets that the Federal Reserve will cut interest rates next week. This would potentially lift economic activity in the world's largest energy consumer, and increase demand.
Government inventory data released on Wednesday showed that U.S. oil inventories unexpectedly grew more than expected in the week to December 6.
It also showed oil production rising to a new peak in the country, with increases in gasoline and distillate inventories for a second straight week, indicating some resilience in U.S. supplies.
Markets are now awaiting a monthly report from the International Energy Agency (IEA), which is expected to provide more cues on the outlook for demand. The IEA holds a much more conservative view on demand than the OPEC.
Source: Investing