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(This December 20 story has been to remove reference to China’s crude Oil steady imports peaking as early as 2025 in paragraph 9)
By Arathy Somasekhar
HOUSTON (Reuters) – Oil prices were little changed on Friday as markets weighed on Chinese demand and expectations of interest rate cuts after data showed cooling U.S. inflation.
Futures settled up 6 cents, or 0.08%, at $72.94 a barrel. US West Texas Intermediate crude oil futures rose 8 cents, or 0.12%, to $69.46 a barrel.
Both benchmarks ended the week down around 2.5%.
The US dollar retreated from a two-year high but was headed for a third straight week of gains, after data showed US inflation cooling two days after the Federal Reserve cut interest rates but lowered its outlook. of rate cuts next year.
A weaker dollar makes oil cheaper for holders of other currencies, while rate cuts could boost oil demand.
Inflation slowed in November, sending Wall Street’s main indexes higher in volatile trading.
“Fears that the Federal Reserve will abandon market support with its interest rate schemes have faded,” said John Kilduff, partner at Again Capital in New York.
“There were concerns in the market about the outlook for demand, especially as it relates to China, and then if we were to lose monetary support from the Federal Reserve, it would be kind of a double whammy,” Kilduff added.
Chinese state-owned refiner Sinopec (OTC:) said in its annual energy outlook on Thursday that China’s oil consumption would peak in 2027, as demand for diesel and gasoline weakens.
OPEC+ needed supply discipline to buoy prices and calm market nerves over continued revisions to its demand outlook, said Emril Jamil, senior research specialist at LSEG.
OPEC+, the Organization of the Petroleum Exporting Countries and its allied producers, recently cut its growth forecast for global oil demand in 2024 for the fifth consecutive month.
JPMorgan forecasts the oil market will move from balance in 2024 to a surplus of 1.2 million barrels per day in 2025, as the bank forecasts non-OPEC+ supply to increase by 1.8 million barrels per day in 2025 and that OPEC production will remain at current levels.
US President-elect Donald Trump said the European Union could face tariffs if the bloc does not reduce its growing deficit with the United States by engaging in major oil and gas trades with the world’s largest economy.
In a move that could reduce supply, G7 countries are considering ways to adjust the price cap on Russian oil, such as through an outright ban or lowering the price threshold, Bloomberg reported Thursday.
Russia has circumvented the $60 per barrel limit imposed in 2022 following the invasion of Ukraine by using its “shadow fleet” of ships, on which the EU and Britain have imposed new sanctions in recent days.
Money managers increased their net long positions in futures and options in the week through December 17, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
