Oil Prices Steady Amid Thin Holiday Trading and Cautious Year-End Sentiment

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Key Highlights from Friday’s Trading

1. Flat Performance in Oil Prices:
   • Brent Oil Futures held steady at $73.22 per barrel.
   • WTI Crude Oil Futures remained largely unchanged at $69.19 per barrel during the Asian session.
2. Thin Trading Volumes:
   • The holiday-shortened week saw reduced trading activity as many institutional investors took time off.
   • Year-end profit-taking and portfolio rebalancing contributed to the subdued market movements.

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Market Dynamics

1. U.S. Crude Inventory Data:
   • The market awaits the EIA’s weekly report due later on Friday, which could provide clarity on supply-demand dynamics.
   • Earlier data from the American Petroleum Institute (API) revealed a 3.2 million barrel drawdown in U.S. crude inventories for the week ending Dec. 20, signaling tightening supplies.
   • Gasoline inventories, however, rose by 3.9 million barrels, while distillate inventories (including diesel and heating oil) fell by 2.5 million barrels.
2. China’s Fiscal Stimulus:
   • Chinese authorities are set to implement a 3 trillion yuan ($411 billion) treasury bond initiative to stimulate their economy, coupled with relaxed regulations for public funding projects.
   • The move aligns with the World Bank’s upward revision of China’s 2024 and 2025 growth forecast, despite ongoing challenges in household confidence and the property sector.
3. Non-OPEC Production Growth Concerns:
   • Potential oversupply from non-OPEC countries remains a risk to global oil prices, adding uncertainty to the demand outlook for 2024.

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Conclusion

Oil prices remained largely unchanged as traders exercised caution amidst thin volumes and year-end rebalancing. Market focus now shifts to the EIA report and China’s fiscal measures, both critical in shaping supply-demand expectations for 2024. The performance of China’s economy, as the world’s largest oil importer, will be pivotal in determining global demand recovery next year.