Oil futures remained largely unchanged on Friday but were set to post modest weekly gains, driven by optimism surrounding China’s economic stimulus efforts. However, a strengthening U.S. dollar limited further price increases.
As of 0535 GMT, Brent crude futures were down by 2 cents, trading at $73.24 per barrel, while U.S. West Texas Intermediate (WTI) crude slipped 1 cent to $69.61, compared to Thursday’s close. Despite these slight losses, both benchmarks were on track for weekly increases, with Brent rising by 0.4% and WTI climbing 0.2%.
The World Bank’s Thursday update offered a boost to market sentiment, raising its growth forecast for China in 2024 and 2025. The institution cited expectations of a recovery fueled by economic stimulus. However, it also cautioned that ongoing challenges—such as weak household and business confidence and difficulties in the property sector—could dampen growth next year.
China, the world’s largest oil importer, also revised its 2023 GDP growth forecast upward by 2.7%, though it acknowledged that the adjustment would have a limited impact on overall economic performance this year.
In a further effort to support its economy, Beijing has approved the issuance of 3 trillion yuan (roughly $411 billion) in special treasury bonds for 2024, according to reports from Reuters. The move is part of a broader fiscal stimulus plan aimed at reviving China’s faltering economy.
However, the market’s upside was tempered by the stronger U.S. dollar, which has surged about 7% this quarter and reached a near two-year high against major currencies. The Federal Reserve’s signal of slower rate cuts in 2025 has further bolstered the dollar, making oil more expensive for buyers using other currencies and limiting price gains.
On the supply side, a report from the American Petroleum Institute (API) revealed a 3.2 million-barrel decline in U.S. crude oil stocks last week, suggesting tightening supply. Traders are now awaiting confirmation of this drawdown in the official U.S. Energy Information Administration (EIA) data, set to be released later Friday. The EIA report, delayed due to the Christmas holiday, is expected to show a smaller inventory draw of 1.9 million barrels for the week ending December 20. Analysts also anticipate declines in gasoline and distillate stocks by 1.1 million barrels and 0.3 million barrels, respectively.
In summary, while oil prices saw limited movement on Friday, they are poised to finish the week higher, buoyed by hopes of an economic revival in China, although a strong dollar has capped more significant gains.
Related topic:
What Time Does Oil Futures Open?
