SINGAPORE (Reuters) – Oil prices extended gains on Friday after ending the previous session at their highest level in more than two months, on hopes that governments around the world might step up policy support to revive economic growth, boosting fuel demand. .
Brent crude futures were up 16 cents, or 0.2%, at $76.09 a barrel by 0132 GMT, closing at their highest level since Oct. 25 on Thursday. U.S. West Texas Intermediate crude oil rose 19 cents, or 0.3%, to $73.32 a barrel, its highest closing price since October 14 on Thursday.
Both contracts were on track to gain for a second straight week, improving trade liquidity as investors return from the holiday season.
Factory activity in Asia, Europe and the United States ended 2024 on a weak note as new year expectations worsened as trade risks mounted under President Donald Trump’s re-election, coupled with China’s fragile economic recovery.
“Asia’s December PMI was mixed, but we still expect manufacturing activity and GDP growth in the region to remain subdued in the near term,” analysts at Capital Economics said in a note on Thursday.
“With growth set to struggle in most countries and inflation below target, we think Asian central banks will continue to ease policy.”
Lower interest rates should spur more economic growth, leading to higher fuel consumption.
Investors are eyeing further interest rate cuts by the Federal Reserve this year to support the economy, while Chinese President Xi Jinping has pledged more aggressive policies to boost growth.
StoneX analyst Alex Hodes said: “With China’s economic trajectory set to play a key role in 2025, hopes are high that government stimulus will drive increased consumption and oil demand growth in the coming months.
In the United States, the world’s largest oil consumer, gasoline and distillate inventories surged last week as refiners ramped up output but fuel demand hit a two-year low. [EIA/S]
Crude oil inventories fell less than expected last week, falling by 1.2 million barrels to 415.6 million barrels, while analysts expected a decrease of 2.8 million barrels.
Traders are also keeping a close eye on recent weather forecasts as a cold wave is expected in the United States and Europe in the coming weeks, which could boost demand for diesel as an alternative to natural gas for heating.
(Reporting by Florence Tan and Shariq Khan; Editing by Christian Schmollinger)