Shafaq News/ Oil prices extended gains on Friday after closing at theirhighest in more than two months in the prior session, amid hopes thatgovernments around the world may increase policy support to revive economicgrowth that would lift fuel demand.
Brent crude futures rose 22 cents, or 0.3%, to $76.15 a barrel by 0420GMT, after settling at its highest since Oct. 25 on Thursday. U.S. West TexasIntermediate crude was up 25 cents, or 0.3%, at $73.38 a barrel, withThursday's close its highest since Oct. 14.
Both contracts are on track for their second weekly increase afterinvestors returned from holidays, improving trade liquidity.
Factory activity in Asia, Europe and the U.S. ended 2024 on a soft noteas expectations for the New Year soured due to growing trade risks from DonaldTrump's impending return to the U.S. presidency and China's fragile economicrecovery.
"The December PMIs for Asia were a mixed bag, but we continue toexpect manufacturing activity and GDP growth in the region to remain subdued inthe near term," Capital Economics analysts said in a note, referring topurchasing managers' indexes data published on Thursday.
"With growth set to struggle and inflation below target in mostcountries, we think central banks in Asia will continue to loosen policy."
Lower interest rates should spur more economic growth that would lead tohigher fuel consumption.
Investors are eyeing further interest rate cuts by the Federal Reservethis year to support the U.S. economy, while China's President Xi Jinping haspledged more proactive policies to promote growth.
"As China's economic trajectory is poised to play a pivotal role in2025, hopes are pinned on government stimulus measures to drive increasedconsumption and bolster oil demand growth in the months ahead," StoneXanalyst Alex Hodes said.
The market also eyes upcoming crude prices from top oil exporter SaudiArabia. Saudi Arabia may raise crude prices for Asian buyers in February forthe first time in three months, tracking gains in Middle East benchmark priceslast month, traders said.
In the U.S., the world's biggest oil consumer, gasoline and distillateinventories jumped last week as refineries ramped up output, though fuel demandhit a two-year low.
Crude stockpiles fell less than expected, down 1.2 million barrels to415.6 million barrels last week compared with analysts' expectations for a2.8-million-barrel draw.
Traders are paying close attention to recent weather forecasts asexpectations of a cold snap in the U.S. and Europe over the coming weeks couldboost demand for diesel as a substitute for natural gas for heating.
Investors are also bracing for Trump's presidency ahead of his Jan. 20inauguration.
"Trump's tariffs on China and their impact on global demandpatterns will be central to oil prices in 2025," said Priyanka Sachdeva,senior market analyst at Phillip Nova.
(Reuters)