Oil Prices Near Five-Month Low as Markets Focus on China’s Stimulus and U.S. Inventories
Oil prices remained under pressure on Wednesday, hovering near their lowest levels in five months as traders assessed the impact of increasing global supply, fresh U.S. tariffs, and potential economic stimulus measures from China.
The market’s downturn, which intensified on Tuesday, was driven by demand concerns following U.S. President Donald Trump’s decision to impose higher tariffs on major trade partners, including China, Canada, and Mexico. The move raised fears of slowing economic activity and weaker global fuel demand.
At the same time, OPEC+ confirmed plans to gradually increase oil production from April, further adding to concerns about an oversupplied market.
Despite the bearish sentiment, China’s commitment to a 5% GDP growth target for 2025 and promises of additional fiscal stimulus offered some support to crude prices. Additionally, industry data indicated a larger-than-expected draw in U.S. oil inventories, hinting at improved demand.
Oil Prices Hold Steady After Steep Drop
As of 01:51 GMT (20:51 ET Tuesday), oil futures continued trading near their multi-month lows:
• Brent crude futures (May delivery) edged down 0.2% to $70.93 per barrel.
• West Texas Intermediate (WTI) crude futures fell 0.3% to $67.46 per barrel.
Both benchmarks had plunged earlier in the week as markets reacted to tariff-related economic headwinds and expectations of higher OPEC+ production.
China Targets 5% GDP Growth, Announces Stimulus Measures
China, the world’s largest oil importer, has reaffirmed its commitment to sustaining economic growth despite global economic uncertainty. At the annual National People’s Congress, the government set a GDP growth target of 5% for 2025, marking the third consecutive year with the same goal.
Key highlights of China’s latest economic plans include:
• Increased fiscal spending and a higher budget deficit to stimulate economic activity.
• Enhanced subsidies and incentives aimed at boosting domestic consumption.
• Expanded debt issuance in 2025 to finance large-scale infrastructure and consumer support programs.
The announcement was closely watched by oil traders, as China’s economic health plays a crucial role in global energy demand. Any successful implementation of these measures could help stabilize oil consumption despite broader macroeconomic pressures.
U.S. Crude Inventories Drop More Than Expected
In the U.S., fresh inventory data provided some optimism for oil markets. According to the American Petroleum Institute (API):
• U.S. crude stockpiles declined by 1.5 million barrels in the week ending February 28, surpassing forecasts of just a 0.3 million barrel draw.
This data suggests that after four consecutive weeks of large inventory builds, U.S. crude supplies may finally be tightening, potentially indicating improved fuel demand.
The official U.S. Energy Information Administration (EIA) inventory report, due later on Wednesday, will offer further clarity on supply trends.
Trump’s Policies Pressure Oil Markets
Oil markets have been further rattled by Trump’s calls for increased energy production, both domestically and internationally. The U.S. President has urged producers to ramp up supply, a move that could weigh on prices amid an already fragile demand outlook.
In addition, the new round of tariffs on Chinese, Canadian, and Mexican goods has stoked fears of slower economic growth and weaker industrial activity, which could dampen global energy consumption in the coming months.
Outlook: Will Oil Prices Rebound?
Despite near-term concerns, some bullish factors could support a price recovery:
1. China’s stimulus efforts may help stabilize demand in the world’s largest oil-consuming economy.
2. Lower U.S. inventories could indicate a tightening domestic market, offsetting some supply-side pressures.
3. Seasonal refinery maintenance cycles in China and the U.S. may lead to increased crude demand in the coming months.
However, persisting trade tensions, OPEC+ production hikes, and Trump’s push for more output could continue weighing on crude prices. Investors will closely monitor China’s economic performance, upcoming U.S. inventory reports, and global supply trends to assess the next potential move in oil markets.
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