Oil Prices Steady, Set for Weekly Gains

Oil prices were stable on Friday, maintaining their position as they looked forward to weekly gains after reaching their highest levels in over two months in the previous session. This steady performance is largely supported by expectations for more economic stimulus in China as well as anticipated lower interest rates in the United States.

By 0900 GMT, Brent crude futures had decreased slightly, falling 7 cents to $75.86 per barrel, following a strong close the day before, which marked the highest price since October 25th. Similarly, US West Texas Intermediate (WTI) crude dropped by 6 cents to $73.07, also reflecting its highest closing value since October 14th on Thursday.

In terms of weekly performance, Brent crude is on track for a 2.2 percent increase, while WTI is set to rise by 3.5 percent this week.

Concerns about the fragility of the Chinese economy have increased expectations for government measures aimed at boosting growth in the world's largest oil importing nation. Analysts believe that China's economic decisions will significantly affect global oil demand moving forward.

Analyst Alex Hodes from StoneX mentioned, “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 a surprising move, China announced wage increases for government workers, which is expected to inject up to $20 billion into the economy and stimulate spending.

Additionally, investors are closely monitoring the Federal Reserve's interest rate strategy. There is anticipation for further interest rate cuts this year, which could provide more support for economic growth in the US. Lower borrowing costs can lead to increased oil demand as they help fuel consumption.

In the United States, there has been a slight drop in crude stockpiles, which decreased by 1.2 million barrels to a total of 415.6 million barrels, a smaller decline than analysts had expected (which was 2.8 million barrels). In contrast, gasoline and distillate inventories saw an increase as refineries ramped up production, despite the fact that fuel demand hit a two-year low.

Traders are also paying attention to updated weather forecasts, noting the possibility of a cold snap over the coming weeks in both the US and Europe. This weather shift could lead to increased demand for diesel heating fuel as temperatures drop.

Oil, Prices, Economy