Dec 27 2024: Oil prices edged higher on Friday, positioning for a weekly increase driven by optimism over economic stimulus in China, the world’s largest oil importer. However, gains were limited by the strength of the U.S. dollar, which hovered near a two-year high.
Brent crude futures rose 14 cents to $73.40 a barrel as of 07:50 GMT, while U.S. West Texas Intermediate (WTI) crude climbed 17 cents to $69.79. On a weekly basis, Brent was up 0.6%, and WTI gained 0.5%.
China’s Economic Outlook and Stimulus Measures
The World Bank raised its forecast for China’s economic growth in 2024 and 2025, citing potential recovery prospects. However, it also highlighted ongoing challenges, including subdued consumer and business confidence and persistent issues in the property sector.
China recently revised its 2023 gross domestic product estimate upward by 2.7%, though the adjustment is expected to have minimal impact on this year’s overall growth. Additionally, Chinese authorities plan to issue 3 trillion yuan ($411 billion) in special treasury bonds in 2025, signaling Beijing’s commitment to reviving its economy.
Stronger Dollar Caps Gains
The U.S. dollar, up roughly 7% this quarter, continued to weigh on oil prices by making the commodity more expensive for non-dollar holders. The dollar’s strength follows the Federal Reserve’s decision to slow the pace of interest rate cuts in 2025.
U.S. Inventory Data Awaited
Oil prices received some support from preliminary data showing a decline in U.S. crude inventories. The American Petroleum Institute reported a 3.2 million-barrel drop last week. Market participants now await official confirmation from the U.S. Energy Information Administration (EIA), with the report due at 1 p.m. EST (1800 GMT) on Friday, delayed due to the Christmas holiday.
Analysts surveyed by Reuters predict crude inventories fell by 1.9 million barrels for the week ending December 20. Gasoline and distillate stocks are expected to decline by 1.1 million barrels and 0.3 million barrels, respectively.
