Oil edged lower on Dec. 26 in light holiday trade as the dollar's strength offset hopes for additional fiscal stimulus in China, the world's biggest oil importer.

Brent crude futures fell 18 cents, or 0.24%, to $73.4/bbl by 1:45 p.m. EST (1845 GMT). U.S. West Texas Intermediate crude was at $69.79, down 0.44%, or 31 cents, from Dec. 24'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 Dec. 24, 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 Dec. 26 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 last week. 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 MMbbl, market sources said on Dec. 24. 

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 Dec. 27, later than normal because of the Christmas holiday.

Analysts in a Reuters poll expect crude inventories fell by about 1.9 MMbbl in the week to Dec. 20, while gasoline and distillate inventories are seen falling by 1.1 MMbbl and 0.3 MMbbl respectively. 

Elsewhere, southbound traffic in Turkey's Bosphorus Strait was set to resume on Dec. 26 having been halted earlier in the day after a tanker suffered an engine failure, shipping agent Tribeca said.

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