By Nicole Jao
NEW YORK (Reuters) – Oil fell on Thursday in light holiday trading as hopes of further stimulus in China, the world's biggest oil exporter, were undermined by the strength of the dollar.
Futures were down 19 cents, or 0.26%, at $73.39 a barrel at 12:45 pm EST (1745 GMT). US West Texas Intermediate crude was at $69.89, down 0.3%, or 21 cents, from the pre-Christmas settlement on Tuesday.
Chinese authorities have agreed to issue 3 billion U.S. dollars ($411 billion) worth of special treasury bonds next year, Reuters reported on Tuesday, citing two sources, as Beijing ramps up fiscal stimulus to revive the faltering economy.
“Stimulating the national economy creates increased demand, and increased demand raises prices,” said Tim Snyder, chief economist at Matador Economics.
The World Bank on Thursday raised its forecast for China's economic growth in 2024 and 2025, but warned that household and business confidence, as well as headwinds in the property sector, will remain subdued next year.
The US dollar continued to climb higher after hitting a key milestone. A strong dollar makes oil more expensive for holders of other currencies.
The latest weekly report on US inventories, from the business group of the American Petroleum Institute, showed that crude oil stocks fell last week by 3.2 million barrels, market sources said on Tuesday.
Traders will wait to see if the official inventory report from the Energy Information Administration confirms the decline. EIA data is due at 1pm EST (1800 GMT) on Friday, later than usual due to the Christmas holiday.
Analysts in a Reuters poll expected crude inventories to fall by about 1.9 million barrels in the week to Dec. 20, while gasoline and distillate inventories were seen falling by 1.1 million barrels and 0.3 million barrels respectively.
Elsewhere, traffic south of Turkey's Bosphorus Strait was set to resume Thursday after an early halt after a tanker malfunctioned in an engine, shipping agency Tribeca said.
($1 = 7.2975 renminbi)