Oil prices climb on hopes of economic stimulus, increased fuel demand

Oil prices extended their gains on Friday after closing at their highest levels in more than two months during the previous session, driven by expectations that global governments may boost policy support to stimulate economic growth, which could, in turn, increase fuel demand.

Brent crude futures rose 22 cents, or 0.3%, to $76.15 a barrel by 0420 GMT, after settling at its highest since Oct. 25 on Thursday. U.S. West Texas Intermediate crude was up 25 cents, or 0.3%, at $73.38 a barrel, with Thursday's close its highest since Oct. 14, News.Az reports, citing Reuters.

Both contracts are on track for their second weekly increase after investors returned from holidays, improving trade liquidity.

Factory activity in Asia, Europe and the U.S. ended 2024 on a soft note as expectations for the New Year soured due to growing trade risks from Donald Trump's impending return to the U.S. presidency and China's fragile economic recovery.

Lower interest rates should spur more economic growth that would lead to higher fuel consumption.

Investors are eyeing further interest rate cuts by the Federal Reserve this year to support the U.S. economy, while China's President Xi Jinping has pledged more proactive policies to promote growth.

The market also eyes upcoming crude prices from top oil exporter Saudi Arabia. Saudi Arabia may raise crude prices for Asian buyers in February for the first time in three months, tracking gains in Middle East benchmark prices last month, traders said.

In the U.S., the world's biggest oil consumer, gasoline and distillate inventories jumped last week as refineries ramped up output, though fuel demand hit a two-year low.

Crude stockpiles fell less than expected, down 1.2 million barrels to 415.6 million barrels last week compared with analysts' expectations for a 2.8-million-barrel draw.

Traders are paying close attention to recent weather forecasts as expectations of a cold snap in the U.S. and Europe over the coming weeks could boost demand for diesel as a substitute for natural gas for heating.

Investors are also bracing for Trump's presidency ahead of his Jan. 20 inauguration.

News.Az