Investing.com– Oil prices rose slightly in Asian trade on Friday, and were set to snap a seven-week losing spree on optimism over interest rate cuts by the Federal Reserve and a positive outlook on demand from the International Energy Agency.
A drop in the – to over four-month lows- greatly benefited crude markets, while traders also positioned for better demand in 2024, on the prospect of lower interest rates and a stronger U.S. economy.
This notion was furthered by the IEA, which slightly lifted its oil demand forecast for 2024. But the IEA’s forecast for demand was still much lower than that posited by the Organization of Petroleum Exporting Countries and allies (OPEC+).
Underwhelming production cuts from the cartel group were a key weight on oil in recent weeks, driving prices to over five-month lows. Even with a positive demand outlook for 2024, crude markets are still expected to remain well supplied.
This was also in part due to strong U.S. production, with recent data showing that total U.S. output remained close to record highs in the past week. U.S. saw a bigger-than-expected drawdown, although fuel demand in the country remained weak, with gasoline inventories seeing a mild build.
expiring February rose 0.3% to $76.84 a barrel, while West Texas Intermediate crude futures rose 0.3% to $72.14 a barrel by 20:31 ET (01:31 GMT).
Crude set for first weekly gain in 8 after dovish Fed
Dovish signals from the Fed were a key support for commodity markets this week, as the central bank in its final meeting for the year and flagged deeper-than-expected rate cuts in 2024.
Lower interest rates spur increased liquidity in markets, improving economic activity and driving up crude demand. A weaker dollar also benefits international oil buyers.
The positive cues from the Fed put Brent and WTI futures on course for their first positive week in eight, with Brent up 1.6% while WTI added 0.7%.
China data in focus for more demand cues
Economic data from China provided mixed cues on the world’s largest oil importer. While rose more than expected in November, growth in and missed expectations.
The data comes after a string of weak economic readings for November, which ramped up concerns over slowing growth in the country.
Concerns over China have also been a major weight on oil markets, as a post-COVID demand boom largely failed to materialize this year. Recent data also showed that China’s crude imports fell sharply in November from last year.
Still, the Chinese government appeared to be continuing with its monetary stimulus policies, injecting cash into the economy to shore up growth. The People’s Bank of China injected about 1.45 trillion yuan ($200 billion) through its medium-term lending facility on Friday.
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