Biggest Chinese Stimulus Since Pandemic Galvanizes Traders, Oil Rises 2%

Meanwhile, analysts argue about global oil demand rates: File Image/Pixabay

News that the China government would once again deploy monetary stimulus to kick-start its economy was said to have triggered Tuesday's crude price gain of about 2 percent, aided by concern that escalating conflicts in the Middle East could harm exports.

However, the rise was tempered by the hurricane that earlier threatened the U.S. Gulf Coast deemed more likely to hit Florida than offshore oil producers.

Brent settled up $1.27, or 1.7 percent, at $75.17 per barrel, while West Texas Intermediate settled up $1.19, or 1.7 percent, at $71.56.

China's central bank unveiled a series of stimulus measures at a briefing on Tuesday in Beijing, the biggest since the pandemic, in a bid to steer the country's sluggish economy more toward the government's growth target.

Another factor that contributed to the upward price trajectory was news from the American Petroleum Institute that crude oil inventories in the U.S. fell by 4.339 million barrels for the week ending September 20, compared to expectations for a 1.1 million barrel draw.

So far this year, crude oil inventories are 15 million barrels under where they were at the start of the year, according to API data.

In other oil news on Tuesday, the Organization of Petroleum Exporting Countries (OPEC) restated in its annual long-term outlook that global oil demand will keep growing to the middle of the century; specifically, it calculated that consumption is set to increase by 17.9 million barrels per day (bpd), or roughly 18 percent, to 120.1 million bpd by 2050.

OPEC stated, "What the Outlook underscores is that the fantasy of phasing out oil and gas bears no relation to fact."

OPEC went on to explain its predictions by pointing out that in light of the 2022 energy shock, advanced economies are re-evaluating the transition from fossil fuels as they acknowledge "the need for energy security," and that developing nations are pushing for access to affordable fuels.

However, this flew in the face of the International Energy Agency's recent annual mid-term outlook, which postulated that demand will level off by the end of the decade to around 106 million bpd.

S&P Global Commodity Insights sees the medium-term future slightly differently, with demand reaching a peak of 109 million bpd in 2034 and gradually declining to fall below 100 million bpd in 2050.