Written by Florence Tan
SINGAPORE (Reuters) – Oil prices extended gains on Friday after closing at their highest levels in more than two months in the previous session on hopes that governments around the world may increase policy support to revive economic growth that will lift demand for fuel.
Futures rose 16 cents, or 0.2 percent, to $76.09 a barrel by 0132 GMT, after closing at their highest levels since October 25 on Thursday. US West Texas Intermediate crude recorded $73.32 per barrel, up 19 cents, or 0.3 percent, with Thursday closing at the highest level since October 14.
Both contracts are on track for a second weekly increase as investors return from the holidays, improving trade liquidity.
Factory activity in Asia, Europe and the United States ended 2024 on a weak note as the outlook for the new year deteriorated amid heightened trade risks from Donald Trump's second presidency and China's fragile economic recovery.
“PMIs for Asia for December were mixed, but we continue to expect manufacturing activity and GDP growth in the region to remain weak in the near term,” Capital Economics analysts said in a note, referring to PMI data published on Friday. , referring to purchasing managers' index data published on Friday. Thursday.
“With growth difficulties and inflation below target in most countries, we believe central banks in Asia will continue to ease policy.”
Lower interest rates should stimulate more economic growth, leading to increased fuel consumption.
Investors are looking forward to further interest rate cuts by the US Federal Reserve this year to support its economy, while Chinese President Xi Jinping has pledged more proactive policies to boost growth.
“As China’s economic trajectory is poised to play a pivotal role in 2025, hopes are pinned on the government’s stimulus measures to drive increased consumption and boost oil demand growth in the coming months,” said Alex Hodes, an analyst at StoneX.
In the United States, the world's largest oil consumer, gasoline and distillate stocks jumped last week as refinery production increased, but demand for fuel reached its lowest levels in two years. (Environmental Impact Assessment/Environmental Assessment)
Crude inventories fell less than expected, down 1.2 million barrels to 415.6 million barrels last week, compared with analysts' expectations of a decline of 2.8 million barrels.
Traders are also paying close attention to the latest weather forecast, as forecasts of a cold snap in the US and Europe over the coming weeks could increase demand for diesel as a heating alternative.
