Oil futures: Crude higher on China stimulus, Russia sanctions talk

Quantum Commodity Intelligence - Crude oil futures Wednesday were climbing higher on growing expectations of further China stimulus, while speculation on tighter sanctions could hit Russian exports.

Front-month Feb25 ICE Brent futures were trading at $73.30/b (1725 GMT) versus Tuesday's settle of $72.19/b.

At the same time Jan25 NYMEX WTI was trading at $69.96/b, versus Tuesday's settle of $68.59/b.

Recent trends have been dictated by concerns over sluggish global demand growth and expected tariff-led trade wars sparked by the incoming Trump administration.

This has kept oil benchmarks at the low end of the post-Covid trading range, but prices have found some support amid further stimulus hints from China and possible tighter sanctions on Russia and Iran.

"The White House is gearing up to potentially escalate sanctions against Russia's oil trade, aiming further to choke off funds to the Kremlin's military endeavours," said Stephen Innes of SPI Asset Management, commenting after US Treasury Secretary Janet Yellen flagged targeted sanctions.

"While specifics are still being finalized, there's talk of targeting particular Russian oil exports—a strategy previously avoided due to concerns over global energy cost spikes," added Innes, noting the global oil surplus and abundant spare capacity.

China also increased rhetoric ahead of this week's critical economic conference, raising hopes of additional stimulus measures for 2025.

Forecast

Meanwhile, the US EIA has lowered its 2025 Brent crude oil price forecast to under $74/b, citing rising non-OPEC supply and subdued demand growth.

The government agency Tuesday highlighted that "inventory builds will put some downward pressure on crude oil prices later in 2025, with Brent falling from an average of $74/b in 1Q25 to an average of $72/b in 4Q25."

Elsewhere in the US, the American Petroleum Institute calculated crude inventories increased by 500,000 barrels last week, while builds were also registered for gasoline and distillates.

EIA data published Wednesday also revealed a moderate fall in crude stocks.

Investors were also waiting on the US CPI report for November, a key measure of inflation. The data could trigger further dollar volatility and is expected to influence the Federal Reserve's interest rate decision next week.