Oil prices fell more than 1% on Wednesday as investors reassessed whether China’s latest stimulus plans will be able to boost its economy and spur fuel demand in the world’s largest crude importer.
Approaching noon EDT Wednesday, Brent crude futures were down $1.44, or 1.92%, at $73.73 a barrel. U.S. West Texas Intermediate
crude was down $1.51, or 2.11%, at $70.05 per barrel.
Despite a slew of monetary support measures announced by China’s central bank on Tuesday, the boldest since the pandemic, analysts warned that more fiscal help was needed to boost activity in the world’s second-largest economy.
Oil prices rose by about 1.7% on Tuesday after China announced sweeping interest rate cuts and more funding. But credit demand is already extremely weak, and the steps did not include any measures to shore up real economic activity.
U.S. oil stockpiles fell by 4.34 million barrels last week while gasoline inventories dropped by 3.44 million barrels and distillate stocks were down by 1.12 million barrels, according to market sources citing American Petroleum Institute figures on Tuesday.
The intensifying conflict between Iran-backed Hezbollah in Lebanon and Israel also supported crude prices, with cross-border rockets launched by both sides increasing fears of a wider conflict.
Although Iran’s leadership has shown restraint, an attack is probably on the cards in order to save face, but without enraging its European allies and disrupting the main oil trade routes, according to at least one expert.