Oil rates see modest increase driven by China demand optimism, strengthening US dollar
Date
12/29/2024 3:22:56 AM
(MENAFN) Oil prices saw a modest increase on Friday, supported by optimism about demand in China, the world's largest crude oil importer. At 10:42 a.m. local time (0742 GMT), the international benchmark brent crude rose by 0.36 percent, reaching USD72.98 per barrel, up from USD72.72 at the previous session's close. Similarly, the US benchmark West Texas Intermediate (WTI) increased by 0.39 percent, rising to USD69.67 per barrel from its prior close of USD69.39. Despite the modest gains, trading volumes were thinner due to the holiday-shortened week.
The increase in oil prices was largely driven by a positive outlook for demand in China. The World Bank recently upgraded its forecast for China’s economic growth in 2024 and 2025, fueling expectations of higher crude oil consumption. In addition, China’s government revised the size of its economy upward by 2.7 percent, bringing it to 129.4 trillion yuan, signaling stronger-than-expected growth prospects.
However, the potential for further gains in oil prices was limited by a strengthening US dollar. As the dollar rises, oil becomes more expensive for buyers holding other currencies, which can dampen demand. The stronger dollar had a suppressive effect on oil prices, restricting the potential for larger increases despite positive demand signals from China.
The market also faced reduced trading activity due to the holiday-shortened week, leading to thinner volumes in the oil markets. With less market activity, prices remained more subdued, despite the favorable outlook for Chinese demand. Traders are expected to closely monitor economic developments in China and any further movements in the US dollar to gauge future price trends.
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