Oil futures rose on Wednesday due to a significant drop in U.S. oil stocks and China’s Central Bank introducing economic support measures.
These factors helped boost hopes for greater demand for oil.
Reports from the Energy Department in the United States showed a large drop in oil stocks. Over 9 million barrels decreased last week.
On the New York Mercantile Exchange NYMEX, the price for West Texas Intermediate for March delivery went up by 0.96%, reaching $75.09 per barrel.
Similarly, Brent crude for April delivery, traded on the Intercontinental Exchange, rose by 0.66%, ending at $79.63 per barrel.
China’s central bank recently announced a cut in the reserve requirement ratio for banks. This change starts on February 5th. It is a step to strengthen a weak economic recovery.
The price of oil got a further push when the Energy Department announced that energy firms had removed 9.2 million barrels of oil from stocks.
This amount was much higher than expected for the week ending January 19th. Analysts from FactSet had predicted a smaller drop of 1.4 million barrels.
However, gasoline stock levels increased by 4.912 million barrels, more than the expected rise of 1.5 million barrels.
Fitch Ratings, in a recent report, kept its Brent price prediction at $80 per barrel for 2024.
The agency pointed out that growing geopolitical tensions, such as recent issues in sea transport in the Red Sea, will likely maintain a geopolitical price addition for oil.
Yet, Fitch believes significant price increases are unlikely unless there are major interruptions in actual oil production or a wider increase in attacks on major oil shipping routes.