Oil prices are heading for weekly gains supported by US growth data

Oil prices retreated on Friday, but they were poised to register their most significant weekly gains since October, buoyed by positive economic data from the United States and signals of Chinese stimulus that supported oil demand.

Brent crude futures declined by 0.57%, or 47 cents, settling at $81.96 per barrel around 0715 GMT. Simultaneously, US West Texas Intermediate crude experienced a 0.79% drop, or 61 cents, reaching $76.75.

For the week, Brent crude is expected to conclude with a 4.5% increase, while the US benchmark crude is on track for a weekly gain of 4.8%. These figures mark the second consecutive week of rising prices and represent the most substantial weekly surge since the week ending October 13, coinciding with the commencement of the conflict between Israel and Hamas in the Gaza Strip.

Friday’s decline was influenced by indications that the disruptions to oil supplies in the Red Sea might alleviate. China reportedly urged Iran to limit attacks by the Iran-aligned Houthi movement on ships in the waters off Yemen, a response to Israeli actions in Gaza. Sources revealed that Chinese officials communicated to their Iranian counterparts that failure to address these concerns could adversely affect trade relations with Beijing.

Oil demand received a boost after Thursday’s data indicated that the US economy experienced more significant growth than anticipated in the fourth quarter. Additionally, China, the world’s second-largest oil consumer, announced a substantial reduction in banks’ reserve requirements aimed at stimulating economic growth.

This week, oil prices were supported by a larger-than-expected decline in US crude inventories and concerns about supply disruption following a Ukrainian drone attack on an oil refinery in southern Russia.