Oil Prices Steady, Poised for Weekly Gains

Oil prices remained stable on Friday, showing signs of a potential weekly increase after reaching their highest point in over two months in the previous session. This stability is supported by expectations of additional economic stimulus in China and a decrease in US interest rates.

By 0900 GMT, Brent crude futures had fallen by 7 cents to $75.86 a barrel, following a close on Thursday that marked the highest level since October 25. Meanwhile, US West Texas Intermediate crude saw a slight dip, losing 6 cents to settle at $73.07, also its highest close since October 14.

Brent is on track for a 2.2 percent gain for the week, while WTI is expected to experience a 3.5 percent increase.

Concerns about the fragility of the Chinese economy have heightened expectations for policy measures aimed at stimulating growth in this leading oil-importing nation. According to Alex Hodes, an analyst with StoneX, “As China’s economic trajectory is poised to play a pivotal role in 2025, hopes are pinned on government stimulus measures to drive increased consumption and bolster oil demand growth in the months ahead.”

In an unexpected move, China has raised wages for government workers, injecting up to $20 billion into its economy, which could positively impact oil consumption.

In the United States, the Federal Reserve's potential for further interest rate cuts in the coming year is being closely monitored. Lower interest rates generally boost economic growth and increase oil demand, as reduced borrowing costs can enhance consumption levels.

In the latest reports, US crude stockpiles saw a smaller-than-expected decrease, dropping by 1.2 million barrels to 415.6 million barrels, while analysts had predicted a decline of 2.8 million barrels. In contrast, gasoline and distillate inventories rose last week due to increased output from refineries, although fuel demand has recently hit a two-year low.

Traders are also keeping an eye on weather forecasts, especially with predictions of a cold snap in the US and Europe, which could elevate the demand for diesel used for heating in the weeks ahead.

Oil, Prices, Economy