Investing.com– Oil prices steadied near two-month highs in Asian trade on Friday, and were headed for a strong weekly performance on hopes that U.S. economic strength and more stimulus measures from China will lift demand in the coming months.
Crude prices surged over 3% each on Thursday after data showed the U.S. economy in the fourth quarter, pointing to continued resilience in the world’s largest fuel consumer.
Thursday’s gains were an extension of earlier strength in prices after top oil importer China rolled out more monetary stimulus and promised more measures to support slowing economic growth.
Positive signals from the world’s two largest economies helped spur some hopes that crude demand will strengthen substantially this year. The positive signals also come after major oil industry bodies- the OPEC and the IEA- forecast improving demand in the coming years.
Persistent concerns over supply disruptions in the Middle East also aided oil prices. The Israel-Hamas war showed little signs of de escalation, while U.S.-led forces also continued to clash with the Iran-aligned Houthi group, which in turn kept up with its strikes on ships in the Red Sea.
expiring in March fell 0.3% to $82.22 a barrel, while fell 0.4% to $76.86 a barrel by 20:04 ET (01:04 GMT).
Both contracts were close to highs last seen in early-December, and were set to gain 4.7% and 5.2%, respectively- in their best week since early-October.
More US, Chinese economic cues awaited
Gains this week helped oil prices recover from a rough start to 2024, which came amid increasing fears that higher-for-longer U.S. interest rates and worsening Chinese economic conditions will stymie demand.
These fears still remained in play, ahead of more cues from the world’s largest economies in the coming days.
U.S. data- which is the Federal Reserve’s preferred inflation gauge- is due later on Friday, and is expected to reiterate that inflation remained sticky in December. Resilience in the U.S. economy also gives the Fed more headroom to keep rates higher for longer.
The Fed is widely expected to keep interest rates steady . Traders were also seen consistently that the central bank will begin trimming rates by as soon as March 2024.
Inventory data released this week also showed that cold weather in the U.S. was weighing on fuel demand. But this notion was offset by weather-related disruptions to production.
In China, purchasing managers index data for January is due next week. Focus will be largely on whether business activity picked up after an underwhelming 2023.
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