Oil rises amid a more-than-expected decline in US crude inventories and stimulus hopes in China

Price action

Brent crude for March delivery rose 20 cents, or 0.3 percent, to $80.24 a barrel by 0128 GMT. US West Texas Intermediate crude also increased 22 cents, or 0.3 percent, to $75.31 per barrel.

“The significant decline in US oil inventories, expectations of economic recovery and more stimulus measures in China have supported oil prices,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.

He added that tensions in the Middle East also supported the purchase.

The US Energy Information Administration said that crude inventories in the United States fell by 9.2 million barrels last week, more than four times what analysts expected in a Reuters poll to fall by 2.2 million barrels.

Oil prices also received support from hopes for economic recovery in China.

On Wednesday, the Chinese Central Bank announced a significant reduction in banks’ reserve requirements, in a move that would pump about $140 billion in cash into the banking system and send a strong signal to support the faltering economy and declining stock markets.

China also said on Wednesday that it was working to expand banks' use of commercial real estate lending, in its latest efforts to ease the liquidity crisis facing troubled real estate companies.

Meanwhile, the focus remains on geopolitical tensions in the Middle East.

Maersk said that nearby explosions forced two ships operated by a unit affiliated with it in the United States and carrying American military supplies to turn back when they were crossing the Bab al-Mandab Strait towards the north, accompanied by pieces of the American Navy.

The US military announced that it carried out more strikes in Yemen early Wednesday.