Investing.com — Oil prices settled higher Wednesday, as sentiment was boosted by a much larger than expected decline in U.S. weekly crude stockpiles and hopes that fresh stimulus measures to boost China’s economy will shore up the oil demand outlook.
By 14:30 ET (19.30 GMT), the futures settled 1% higher at $75.09 a barrel and the contract climbed 0.7% to $80.06 a barrel.
US inventories slump on weather-related production disruptions
Inventories of U.S. crude declined by about 9.2 million barrels in the week ended Jan. 19, beating expectations of about only 2.2M barrels.
Gasoline inventories, one of the products that crude is refined into, by about 4.9M barrels against expectations of a build of 2.3M barrels while distillate stockpiles by 1.4M barrels, compared to expectations for a rise of 348,000 barrels.
The build in products come even as refinery activity fell to 85.5% of capacity, well below the 92.6% rate in the previous week, as adverse weather halted some activity, particularly in with notable outages in North Dakota.
Chinese stimulus hopes stokes crude demand optimism
The People’s Bank of China governor Pan Gongsheng said that China’s central bank will cut the amount of cash that banks must hold as reserves from Feb. 5, the first such cut for the year, freeing up an estimates 1 trillion yuan ($140 billion) to the market, as policymakers increase efforts to shore up the fragile recovery in the world’s second largest economy.
Weak data from China, the world’s largest oil importer, has been a major point of contention for crude markets, after the country clocked weaker-than-expected gross domestic product figures in the fourth quarter.
(Peter Nurse, Ambar Warrick contributed to this article.)
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