Oil Prices Flat Amid China Stimulus and U.S. Supply Focus

Oil prices remained stable in Asian trade on Tuesday after significant declines in the previous session, influenced by lackluster stimulus measures in China and ongoing focus on U.S. supplies.

Crude prices fell on Monday due to disappointing fiscal spending announcements from China, the world’s largest oil importer, along with disappointing inflation data.

In the U.S., tropical storm Rafael was dissipating in the Gulf of Mexico, alleviating fears of supply disruptions in the area.

By 20:29 ET (01:29 GMT), Brent oil futures for January rose 0.2% to $71.95 a barrel, while West Texas Intermediate crude also increased by 0.2% to $68.04 a barrel, following a decline of over 2% on Monday.

Oil markets faced pressure from a strong dollar, as anticipation regarding a Donald Trump victory in the presidential election pushed the greenback to a four-month high. Investors were also keenly awaiting details of Trump’s policies impacting U.S. oil production and global supplies.

China Stimulus Underwhelms, More Measures Awaited

China has announced a debt swap package worth approximately 10 trillion yuan ($1.6 trillion) aimed at supporting local governments in the following years. However, the measure is expected to have minimal direct effect on the economy, as Beijing refrained from introducing any direct fiscal measures to bolster the property market and private consumption.

The lack of decisive action has dampened sentiments towards China, increasing worries about declining demand in the world’s largest oil consumer. Chinese oil imports have consistently decreased in recent months, with signs of weakening fuel demand in the country.

U.S. Supply Fears Abate as Tropical Storm Rafael Dissipates

Easing fears over potential supply disruptions in the U.S. contributed to lower oil prices, as tropical storm Rafael weakened in the Gulf of Mexico. Some energy operations in the region began to resume, although reports indicated that around 25% of oil production remained offline. The storm downgraded from hurricane status and is predicted to weaken further as it drifts southwest.