Market Analysis
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Oil prices rose in Asian trading on Friday, buoyed by stronger-than-expected economic data from China, which boosted market optimism. However, gains were limited by a reduction in geopolitical tensions in the Middle East.
As of 21:35 ET (02:35 GMT), Brent Crude Futures increased by 0.4% to $81.63 a barrel, while West Texas Intermediate (WTI) Futures for March delivery rose 0.5% to $78.24 a barrel. The previous session saw a dip in prices as traders took profits following a four-month high earlier in the week.
The market was also impacted by reports that Yemen's Houthi militia could announce a suspension of attacks on ships in the Red Sea following a ceasefire agreement between Israel and Hamas, which helped push oil prices lower.
On the demand side, stronger-than-expected Chinese economic data, including GDP growth of 5% for 2024, industrial production gains, and strong retail sales in December, boosted expectations for rising oil demand. China’s continued recovery is crucial for global oil consumption, particularly as concerns grow over potential oversupply from non-OPEC producers.
However, oil prices were capped by the potential for easing tensions in the Middle East. The anticipated cessation of Houthi attacks on shipping lanes, which have disrupted maritime routes since November 2023, contributed to stabilizing sentiment. A ceasefire agreement between Israel and Hamas, combined with the halt in hostilities from the Houthis, could help restore confidence in these critical shipping routes and affect global oil supply chains.
Additionally, U.S. sanctions on Russian oil exports provided some upward support for prices. The sanctions, which target entities responsible for a significant portion of Russian and Iranian crude exports, are expected to tighten global supply and further bolster oil prices. This came after a drawdown in U.S. crude oil inventories, which also signaled a tightening supply.
Paraphrasing text from "Investing.com" all rights reserved by the original author.