Oil prices continued their upward momentum on Friday, building on a strong finish in the previous session that marked their highest levels in over two months. Market optimism surrounding potential government measures to bolster global economic growth fueled expectations for increased energy demand.
By 0132 GMT, Brent crude futures edged up 16 cents, or 0.2%, to $76.09 per barrel, following Thursday’s close at its highest since October 25. Similarly, U.S. West Texas Intermediate (WTI) crude gained 19 cents, or 0.3%, to reach $73.32 per barrel, its strongest finish since October 14.
Both benchmarks are poised for a second consecutive weekly gain as trading activity picked up after the holiday season, enhancing market liquidity.
However, recent data painted a mixed picture of global manufacturing activity. Factory output in Asia, Europe, and the U.S. ended 2024 on a subdued note, clouded by escalating trade risks linked to a potential second Donald Trump presidency and a fragile economic recovery in China.
“The December PMIs for Asia were uneven, reflecting persistent challenges. We anticipate manufacturing and GDP growth across the region will remain sluggish in the near term,” analysts at Capital Economics wrote, referencing the latest purchasing managers’ index (PMI) data released Thursday.
With inflation below target in many economies, analysts expect Asian central banks to maintain accommodative monetary policies. Lower interest rates are seen as a potential driver of economic growth, which could, in turn, stimulate energy consumption.
Investors are closely monitoring the U.S. Federal Reserve, which is expected to implement further interest rate cuts to sustain economic growth. Meanwhile, Chinese President Xi Jinping has committed to proactive measures aimed at boosting domestic consumption and overall economic expansion.
“China’s economic policies will be critical in shaping oil demand in 2025. The market is optimistic that government stimulus will reinvigorate consumption and drive stronger growth in energy demand,” said Alex Hodes, an analyst at StoneX.
In the U.S., the world’s largest oil consumer, fuel demand dropped to its lowest level in two years last week, even as gasoline and distillate inventories climbed due to increased refinery output. Crude stockpiles fell by 1.2 million barrels to 415.6 million barrels, though the decline fell short of analysts’ expectations for a 2.8-million-barrel reduction.
Market participants are also monitoring weather forecasts, with a potential cold spell in the U.S. and Europe likely to drive up demand for diesel as an alternative to natural gas for heating.
The oil market remains caught between near-term uncertainties and longer-term hopes for recovery, as policymakers across major economies look to balance growth strategies with evolving trade and economic challenges.
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