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China to ramp up fiscal support for consumption next year

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API shows US crude stocks fall 3.2 million barrels,

sources say

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Coming up: EIA supply report on Friday

(Updates prices, market activity with commentary; changes

byline; previous dateline LONDON)

By Nicole Jao

NEW YORK, Dec 26 (Reuters) - Oil edged lower on Thursday

in light holiday trade as hopes for additional fiscal stimulus

in China, the world's biggest oil importer, offset by dollar

strength.

Brent crude futures fell 19 cents, or 0.26%, to

$73.39 a barrel by 12:45 p.m. EST (1745 GMT). U.S. West Texas

Intermediate crude was at $69.89, down 0.3%, or 21 cents,

from Tuesday's pre-Christmas settlement.

Chinese authorities have agreed to issue 3 trillion yuan

($411 billion) worth of special treasury bonds next year,

Reuters reported on Tuesday, citing two sources, as Beijing

ramps up fiscal stimulus to revive a faltering economy.

"Injecting a stimulus into a nation's economy creates

increased demand, and increased demand pushes prices higher,"

said Tim Snyder, chief economist at Matador Economics.

The World Bank on Thursday raised its forecast for

China's economic growth in 2024 and 2025, but warned that

subdued household and business confidence, along with headwinds

in the property sector, would keep weighing it down next year.

The U.S. dollar continued to edge up higher after hitting a

milestone on. A stronger dollar makes oil more expensive

for holders of other currencies.

The latest weekly report on U.S. inventories, from the

American Petroleum Institute industry group, showed crude stocks

fell last week by 3.2 million barrels, market sources said on

Tuesday.

Traders will be waiting to see if the official inventory

report from the Energy Information Administration confirms the

decline. The EIA data is due at 1 p.m. EST (1800 GMT) on Friday,

later than normal because of the Christmas holiday.

Analysts in a Reuters poll expect crude inventories fell by

about 1.9 million barrels in the week to Dec. 20, while gasoline

and distillate inventories are seen falling by 1.1 million

barrels and 0.3 million barrels respectively.

Elsewhere, southbound traffic in Turkey's Bosphorus Strait

was set to resume on Thursday having been halted earlier in the

day after a tanker suffered an engine failure, shipping agent

Tribeca said.

($1 = 7.2975 Chinese yuan renminbi)

(Additional reporting by Alex Lawler in London, Yuka Obayashi

in Tokyo and Emily Chow in Singapore; Editing by Alexandra

Hudson, Louise Heavens and Richard Chang)