Rising momentum in oil

Oil edged closer to a one-month high after a larger-than-expected fall in U.S. inventories and China’s announcement of additional stimulus. U.S. crude rose above $75 a barrel after reaching its highest level since Dec. 26 in intraday trading on Wednesday, while Brent rose above $80. U.S. inventories fell by more than 9 million barrels last week, falling six times more than forecast, to their lowest level since October. In China, the government said it would cut banks’ reserve requirement ratio in two weeks and signaled more support measures could be coming, helping the outlook for energy consumption in its largest crude importer. Oil has struggled to break out of a narrow range this month, with geopolitical tensions in the Red Sea weighing on global trade offset by concerns that crude supply growth from non-OPEC producers will remain strong. In a reminder of the rising risks in the Middle East, the U.S. Navy thwarted attacks on two container ships in Yemen by Iran-backed Houthi rebels. “The decline in EIA stockpiles may well be an anomaly, given the unusually cold weather that has disrupted production recently,” said Charu Chanana, market strategist at Saxo Capital Markets. “However, non-OPEC supply continues to offset Middle East concerns, suggesting that oil may remain tight until there is greater clarity on the global growth outlook.”