Oil Set for Weekly Loss on China Demand Fears

Oil Set for Weekly Loss on China Demand Fears
Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang Province, China, on Dec. 7, 2018. (Stringer/Reuters)
Reuters
2/2/2024
Updated:
2/2/2024

LONDON—Oil prices remained on track on Friday for weekly losses on China demand fears.

Brent crude futures were up 27 cents, or 0.3 percent, at $78.97 a barrel by 1215 GMT and U.S. West Texas Intermediate crude futures gained 23 cents, or 0.3 percent, to $74.05.

The Brent benchmark had approached $85 a barrel in Monday trading.

The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, has output cuts of 2.2 million barrels per day (bpd) in place for the first quarter, as announced in November.

“What has already been made clear last year is that the reversal of those cuts will be gradual,” said UBS analyst Giovanni Staunovo, adding that the bank expects an extension into the second quarter.

Also supporting oil prices was the U.S. Federal Reserve’s decision to keep the benchmark overnight interest rate in the 5.25–5.50 percent range and comments by Fed Chair Jerome Powell, saying interest rates had peaked and would move lower in the coming months.

Lower interest rates would reduce consumer borrowing costs, which can boost economic growth and oil demand.

Concern over China’s economic recovery continued to linger, with the International Monetary Fund on Friday forecasting that the country’s economic growth would slow to 4.6 percent in 2024 and decline further in the medium to about 3.5 percent in 2028.

Meanwhile, concern over shipping dragged on after a military spokesperson for the Iran-aligned Houthi group said on Thursday that attacks on shipping will persist until Israel’s “siege on the Gaza Strip is lifted.”