Oil prices rose on Friday, capping off the week with gains fueled by cold weather in Europe and the United States, as well as additional economic stimulus measures announced by China.
Brent crude futures climbed by $0.58, or 0.8%, to settle at $76.51 per barrel, the highest level since October 14. Similarly, U.S. West Texas Intermediate (WTI) crude rose $0.83, or 1.13%, to $73.96 per barrel, marking its highest price since October 11.
For the week, Brent crude recorded a 2.4% gain, while WTI posted a strong 5% increase.
Chinese Economic Stimulus Boosts Sentiment
Signs of fragility in the Chinese economy have heightened expectations for measures to boost growth in the world’s largest oil importer.
“China is not holding back at this stage in announcing efforts to stimulate economic activity, and the market is closely watching,” said John Kilduff, a partner at Again Capital in New York. He added that concerns over weak Chinese demand were a key factor in lower demand assumptions last year.
This week, China unveiled new measures to bolster its economic growth, including a surprise move to raise government employees’ wages and a significant increase in funding through long-term treasury bonds. The additional funding aims to stimulate business investment and initiatives to boost consumer spending.
Cold Weather and U.S. Supply Trends Provide Additional Support
Oil prices are also likely to benefit from cold weather forecasts in certain regions.
“Oil demand is likely to get a boost from cold temperatures across Europe and the United States,” said Giovanni Staunovo, an analyst at UBS.
Another factor supporting prices is the number of active U.S. oil rigs, an indicator of future production, which fell by one rig to 482 this week, according to energy services firm Baker Hughes.
Data from the U.S. Energy Information Administration (EIA) showed crude oil inventories declined by 1.2 million barrels to 415.6 million barrels last week, providing additional support to prices.
Despite this, fuel and distillate inventories in the U.S. jumped due to increased refinery output. However, fuel demand hit its lowest level in two years, tempering some of the week's gains.
