Crude prices lifted by falling US stockpiles and stimulus from China

London — Oil prices rose on Thursday after data showed US crude stockpiles fell more than expected last week, while the Chinese central bank’s cut in commercial banks’ reserve ratio reinforced hopes of more stimulus measures and economic recovery.

Brent crude futures were up 97c, or 1.2%, to $81.01 a barrel at 9.55am GMT, while West Texas Intermediate was up $1.03, or 1.4%, to $76.12.

“A significant drop in the US oil inventories and expectations of China’s economic recovery and more stimulus measures supported oil prices,” said Toshitaka Tazawa, an analyst at Fujitomi Securities. “Tensions in the Middle East were also behind buying,” he added.

US crude stockpiles tumbled by 9.2-million barrels last week, the Energy Information Administration said, far more than the drawdown of 2.2-million barrels forecast by analysts in a Reuters survey.

The drawdown was driven by a sharp decline in US crude imports as winter weather shut refineries and kept motorists off the road.

US crude output fell from a record-equalling 13.3-million barrels a day two weeks ago to a five-month low of 12.3-million bbl/day after oil wells froze.

Prices also drew support from the People’s Bank of China announcing a deep cut in bank reserves on Wednesday, in a move that will inject about $140bn cash into the banking system and send a strong signal of support for a fragile economy and plunging stock markets.

Geopolitical tensions in the Middle East remained in focus, though price gains were capped as risk premiums have already been priced in, said Priyanka Sachdeva, senior market analyst at brokerage firm Phillip Nova.

“There is no actual damage done to crude oil supplies … it’s mere anticipation that the Red Sea contagion will lead to further disruption in oil flow from the producing region,” Sachdeva said.

In the latest shipping incident, Maersk said nearby explosions forced two ships operated by its US subsidiary and carrying US military supplies to turn around when they were transiting the Bab al-Mandab Strait off Yemen.