By Arathy Somasekhar
HOUSTON (Reuters) -Oil prices were little changed on Friday as markets weighed Chinese demand and interest rate cut expectations after data showed U.S. inflation was cooling.
futures closed up 6 cents, or 0.08%, at $72.94 a barrel. U.S. West Texas Intermediate crude futures rose 8 cents, or 0.12%, to $69.46 a barrel.
Both benchmarks ended the week with a loss of around 2.5%.
The US dollar retreated from a two-year high but was on track 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 for interest rate cuts next year.
A weaker dollar makes oil cheaper for holders of other currencies, while interest rate cuts could boost oil demand.
Inflation slowed in November, sending Wall Street’s major indexes higher in volatile trading.
“The fear that the Fed would give up on supporting the market with its interest rate programs has disappeared,” said John Kilduff, partner at Again Capital in New York.
“There were concerns in the market about the outlook for demand, especially when it comes to China, and if we lost monetary support from the Fed it would be something of a one-two punch,” Kilduff added.
Chinese state refiner Sinopec (OTC:) said on Thursday in its annual energy outlook that Chinese crude oil imports could peak as early as 2025 and the country’s oil consumption would peak in 2027, as demand for diesel and gasoline weakens.
OPEC+ needed supply discipline to boost prices and calm market jitters amid ongoing revisions to demand forecasts, said Emril Jamil, senior research specialist at LSEG.
OPEC+, the Organization of the Petroleum Exporting Countries and related producers, recently cut its growth forecast for global oil demand in 2024 for the fifth month in a row.
JPMorgan sees the oil market moving from equilibrium in 2024 to a surplus of 1.2 million barrels per day in 2025, while the bank forecasts that non-OPEC+ supply will increase by 1.8 million barrels per day in 2025 and that OPEC production will remain at current levels.
Newly elected US President Donald Trump said the European Union could face tariffs if the bloc does not reduce its growing deficit with the US by making major oil and gas deals with the world’s largest economy.
In a move that could tighten supply, G7 countries are considering ways to tighten the price ceiling on Russian oil, such as with an outright ban or by lowering the price threshold, Bloomberg reported Thursday.
Russia has circumvented the $60 per barrel limit imposed in 2022 after the invasion of Ukraine through the use of its “shadow fleet” of ships, which the EU and Britain have responded to with further sanctions in recent days.
Money managers increased their net long futures and options positions in the week to December 17, the US Commodity Futures Trading Commission (CFTC) said on Friday.
