Oil Prices Set for Weekly Gain on China Expectations
Oil prices edged up on Friday and were on track for a weekly gain, boosted by expectations that economic stimulus efforts will boost a recovery in China, while a stronger dollar capped gains.
Brent crude futures were up 14 cents at $73.40 a barrel by 0750 GMT. U.S. West Texas Intermediate crude was at $69.79, up 17 cents, from Thursday’s close. For the week, Brent rose 0.6% and WTI gained 0.5%.
The World Bank on Thursday raised its forecasts for China’s economic growth in 2024 and 2025, but said weak household and business confidence, along with headwinds in the property sector, would continue to weigh next year.
China, the world’s biggest oil importer, revised up its 2023 gross domestic product estimate by 2.7%, but also said the change would have little impact on growth this year.
China has agreed to issue 3 trillion yuan ($411 billion) worth of special government bonds next year, Reuters reported this week citing sources, as Beijing moves to revive its ailing economy.
However, a stronger U.S. dollar weighed on oil prices and capped gains. The currency has risen about 7% this quarter and remains near a near two-year peak against major currencies after the Federal Reserve signaled a slower pace of interest rate cuts through 2025.
A stronger dollar makes oil more expensive for holders of other currencies.
The latest weekly report on U.S. inventories from industry group the American Petroleum Institute showed crude stocks fell last week by 3.2 million barrels, market sources said on Tuesday.
Traders will be waiting to see if the official inventory report from the U.S. Energy Information Administration confirms the decline. The EIA data is due at 1 p.m. EST (1800 GMT) on Friday, later than usual because of the Christmas holiday.
Analysts in a Reuters poll forecast crude inventories fell by about 1.9 million barrels in the week to Dec. 20, while gasoline and distillate stocks were seen falling by 1.1 million barrels and 0.3 million barrels, respectively.
Source: Fxstreet
