Oil prices saw a slight increase in Asian trade on Tuesday, continuing gains from the previous session. This rise was influenced by China's clear signals on fiscal stimulus plans and the threat of wildfires in Canada approaching vital oil hubs.
However, the anticipation of key U.S. inflation data, which will influence interest rate forecasts, tempered larger gains. The dollar's recent strength also put pressure on oil markets.
As of 20:40 ET (00:40 GMT), Brent oil futures for July delivery were up 0.3% to $83.59 a barrel, and West Texas Intermediate crude futures rose 0.3% to $78.85 a barrel. Both contracts had increased by more than 1% on Monday.
China Announces Fiscal Stimulus Plans
China’s finance ministry announced on Monday that it will begin raising 1 trillion yuan ($138 billion) through a long-anticipated bond issuance this week. This issuance aims to stimulate China's sluggish economy by issuing special government bonds with maturities ranging from 20 to 50 years. The funds will target key sectors such as infrastructure to boost economic growth. Despite mixed inflation data over the weekend—consumer inflation rose while producer inflation fell for the 19th consecutive month—the confirmation of the bond issuance has generated some optimism about economic improvement in the world's largest oil importer.
Potential Supply Disruptions from Canadian Wildfires
Severe wildfires in Western Canada have raised concerns about potential disruptions to the country's oil and gas supplies, particularly as they approach a significant oil hub. Residents of Fort McMurray, Alberta, were placed on alert as two "extreme" wildfires spread. Fort McMurray is near Canada’s largest oil-sands operations and was severely affected by wildfires in 2016. Although rain has reduced the immediate threat, residents remain vigilant. Any escalation of the wildfires could disrupt Canada's substantial oil and gas industry, which is critical to North American crude markets. In 2023, Canada experienced its worst wildfire season, which cut production by as much as 300,000 barrels per day, and the 2016 fires reduced output by about 1 million barrels per day.
Paraphrasing text from "Reuters" all rights reserved by the original author.
