Investing.com – Oil prices rose in Asian trading on Friday, driven by upbeat Chinese economic data that beat expectations and lifted market sentiment, however, gains were capped by easing geopolitical tensions in the Middle East.
At 21:35 EST (02:35 GMT), futures were up 0.4% at $81.63 a barrel, and contracts expiring in March were up 0.5% at $78.24 a barrel.
Oil settled lower in the previous session as market participants took profits after prices reached a four-month high earlier this week.
Expectations that the Yemeni Houthi group would announce the cessation of its attacks on ships in the Red Sea after the ceasefire agreement between Israel and the Islamic Resistance Movement (Hamas) caused pressure on oil prices.
Strong Chinese data spurs optimism about increased demand
Data on Friday showed that the Chinese exceeded expectations in the fourth quarter of 2024, reaching 5% growth, which is in line with Beijing’s 5% growth target.
Other data showed growth increased more than expected in December as recent stimulus measures from Beijing continue to support business activity.
December was also stronger than expected and accelerated sharply from the rise seen in the previous month.
The outlook for oil demand hinges on the hope that China, the world’s largest oil importer, will be able to revive its economy, especially since there are concerns about a potential oversupply due to expected increases in production from non-OPEC countries.
Expecting a halt to Houthi attacks in the Red Sea limits the gains
On the geopolitical arena, maritime security officials expect the Yemeni Houthi militia to stop its attacks on ships in the Red Sea after the ceasefire agreement between Israel and Hamas.
Since November 2023, the Houthis have carried out more than 100 attacks on ships, causing major disruptions to global shipping and increasing insurance costs.
The expected cessation of hostilities could restore confidence in these vital sea routes, potentially stabilizing shipping operations and impacting supply chains.
US sanctions on Russian oil provide support
In a strategic move, the United States imposed new sanctions targeting Russian oil exports. The International Energy Agency noted that these sanctions could disrupt Russian oil supply chains, which could lead to a tightening of the global oil market.
The sanctions focus on entities responsible for more than a third of Russian and Iranian crude exports in 2024, with the aim of limiting their ability to transport and sell oil. This development has raised concerns about potential supply shortages, contributing to upward pressure on oil prices.
Oil prices reached their highest levels in several months earlier this week after the announcement was made, in anticipation of shrinking supply.
The US Energy Information Administration (EIA) recently showed a significant decline in crude oil inventories over the past week. This reduction also indicates a tightening of supply.
https://i-invdn-com.investing.com/news/LYNXMPEBB70BB_L.jpg
Source link