Oil Rises After Whiplash Week on Chinese Stimulus, Tighter Supply By Investing.com – Investing.com

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Investing.com — Oil prices rose on Friday after wild swings throughout the week as markets weighed in on tightening supply and demand uncertainty, with the focus now shifting squarely to a Federal Reserve meeting next week.

Crude oil prices were expected to finish higher this week as new stimulus from China raised hopes that fuel demand at the world’s largest oil importer would improve. Oil prices also remained near the 10-week highs reached earlier this month as the prospect of tightening global supplies appeared to have bottomed markets.

But caution over an upcoming Fed meeting still hampered big gains in the oil markets, especially as prices rebounded during positioning for the meeting. The greenback was up sharply this week from a 15-month low earlier in July.

futures were up 0.9% to $80.36 a barrel, while futures were up 0.9% to $76.36 a barrel at 22:16 ET (02:16 GMT).

Stimulus measures in China, focus on tightening inventories

Oil prices received some support from bets that China – the world’s largest importer of crude oil – will take more stimulus to support a slowing economic recovery.

The country unveiled new measures on Friday to boost local spending, particularly in the auto and consumer goods sectors. Beijing has vowed to boost local consumption to support an economic recovery this year.

Data released earlier this week showed it slowed sharply in the second quarter, prompting government officials to pledge more fiscal support.

The country also imported near record levels of crude oil in the first half of 2023, with refinery demand remaining strong. In contrast, China’s sluggish fuel consumption has been a source of fear for oil markets.

On the supply side, lower production in Saudi Arabia and Russia pointed to tighter oil markets in the second half of 2023, which analysts say is likely to support oil prices.

Fed Meeting Awaits, Markets Watch For Potential Break

While the Fed is widely expected to wrap up a two-day meeting on Wednesday, markets are watching for signs that the central bank intends to end its rate hike cycle for the rest of the year.

The prospect of a Fed break, after weaker than expected, had led to sharp increases in oil prices earlier in July, as the dollar retreated. Any easing signal from the central bank could lead to more gains in crude oil markets.

But as US rates are likely to remain high for longer, markets were also concerned that global economic conditions will worsen in the second half of 2023, which could hurt oil demand.

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