By Florence Tan
SINGAPORE (Reuters) – Oil prices continued to rise on Friday after closing at their highest level in more than two months in the previous session on hopes that governments around the world will increase policy support to revive economic growth that would boost demand for the fuel.
futures rose 16 cents, or 0.2%, to $76.09 a barrel by 01:32 GMT after settling at their highest level since Oct. 25 on Thursday. U.S. West Texas Intermediate crude was at $73.32 a barrel, up 19 cents, or 0.3%, at its highest since Oct. 14 on Thursday.
Both contracts are on track for their second weekly gains as investors return from vacations, improving trading liquidity.
Factory activity in Asia, Europe and the US ended 2024 on a subdued note as expectations for the new year soured amid rising trade risks from Donald Trump’s second term and China’s fragile economic recovery.
“December PMIs for Asia were mixed, but we still expect manufacturing activity and GDP growth in the region to remain muted in the near term,” Capital Economics analysts said in a note, citing PMI data released on Thursday.
“With growth expected to be difficult and inflation below target in most countries, we think central banks in Asia will continue to ease policy.”
Lower interest rates should stimulate higher economic growth, which should lead to higher fuel consumption.
Investors expect further interest rate cuts by the US central bank this year to support its economy, while Chinese President Xi Jinping has promised more proactive policies to promote growth.
“With China’s economic trajectory poised to play a key role in 2025, hopes are pinned on government stimulus measures to encourage increased consumption and boost oil demand growth in the coming months,” said StoneX analyst Alex Hodes.
In the US, the world’s biggest oil consumer, inventories of gasoline and distillates jumped last week as refiners increased production, but demand for the fuel fell to a two-year low. [EIA/S]
Crude oil inventories fell less than expected by 1.2 million barrels to 415.6 million barrels last week compared with analysts’ expectations for a 2.8 million barrel drop.
Traders are also paying close attention to recent weather forecasts as cold expectations in the US and Europe over the coming weeks could boost demand for diesel fuel as a heating substitute.
