WTI Crude Hits Highest Price Since October—Why China’s Economic Stimulus Is Driving Up Oil

Oil prices rose on Thursday, driven by expectations of China’s economic stimulus measures for the new year.

West Texas Intermediate (WTI) crude for February delivery on the New York Mercantile Exchange (NYMEX) settled at $73.13 per barrel, up $1.41, or 1.97%, from the previous session. This marks WTI’s highest closing price since October 14, 2023.

Brent crude for March delivery on London’s ICE Futures exchange rose $1.29, or 1.73%, to $75.93 per barrel.

Market optimism is growing as China is expected to follow through on its pledge to implement economic stimulus measures this year, which could boost oil demand.

In his Tuesday New Year’s Eve address, Chinese President Xi Jinping stated that “2024 saw steady progress overall” and promised, “In 2025, we will fully complete the 14th Five-Year Plan, implement more proactive and effective policies,” according to state news agency Xinhua.

Antonio Di Giacomo, senior market analyst at XS.com, said President Xi’s commitment to more aggressive policies to stimulate economic growth has raised expectations for increased energy demand.

“While recent data indicates marginal growth in the country’s manufacturing activity, sectors such as services and construction have started showing signs of recovery, suggesting a gradual strengthening of China’s economy,” he said.

The upward trend of oil prices is also supported by forecasts of increased energy demand as winter storms sweep across parts of the United States, including Texas.

According to MarketWatch, the U.S. Energy Information Administration (EIA) reported a decrease of 1.2 million barrels in commercial crude oil inventories for the week ending December 27. This figure was lower than the market’s anticipated drop of 2.4 million barrels.