Oil prices saw an uptick in Asian trade as attention shifted towards potential fiscal stimulus in China, the world’s top oil importer, and the implications of Donald Trump’s presidency.
Following Trump’s victory in the 2024 elections, crude prices faced some pressure as the dollar surged to a four-month high, impacting oil markets. However, the greenback stabilized on Thursday.
Additionally, oil markets were influenced by data revealing a larger-than-expected increase in U.S. inventories.
Brent crude futures expiring in January rose 0.5% to $75.28 a barrel, while WTI crude rose 0.4% to $71.54 a barrel by 20:19 ET (01:19 GMT).
China NPC Meeting Eyeing Fiscal Cues
The National People’s Congress of China began a four-day meeting this week, with expectations for outlining plans to increase fiscal spending to stimulate economic growth in the country.
Amid a prolonged growth slowdown, China is anticipated to announce a significant rise in fiscal spending. Recent aggressive stimulus measures from Beijing may be further elaborated on during the NPC meeting.
Analysts from JPMorgan suggested that a Trump presidency could prompt China to implement more fiscal stimulus, especially with Trump’s promises of imposing trade tariffs on the country.
Markets Assess Trump Victory and U.S. Developments
Oil prices initially dropped after Trump’s election win due to concerns of increased U.S. oil production exacerbating global oversupply. However, prices rebounded as expectations grew for tougher stances on Iran and Venezuela, potentially leading to more sanctions and reduced global oil supply.
Trump’s expansionary policies are seen as beneficial for economic growth, supporting U.S. demand in the future. Alongside U.S. politics, negative market signals were derived from larger-than-expected inventory builds.
Traders were monitoring potential supply disruptions in the Gulf of Mexico from Hurricane Rafael, which is projected to impact the oil-rich region this week.
An interest rate decision from the is anticipated later on Thursday, with a 25 basis point rate cut widely expected.
Analysis:
The rise in oil prices due to China’s potential fiscal stimulus and the impact of Trump’s presidency on the energy market highlights the interconnectedness of global events and financial markets. Investors should pay attention to political decisions and economic policies that can influence oil prices and market dynamics. Understanding these factors can help individuals make informed decisions about their investments and financial strategies.
