Oil prices firm on hopes of US policy support for economic growth

OIL prices inched higher on Monday (Dec 23), along with other risk assets, after US data showed cooling inflation, reviving hopes of further policy easing next year that will support global economic growth and oil demand.

Brent crude futures rose 26 US cents, or 0.4 per cent, to US$73.20 a barrel by 0141 GMT. US West Texas Intermediate crude futures climbed 31 US cents, or 0.5 per cent, to US$69.77 per barrel.

“Risk assets, including US equity futures and crude oil, have started the week on a firmer footing,” IG markets analyst Tony Sycamore said, adding that cooler inflation data helped alleviate concerns following the Federal Reserve’s hawkish rate cut.

“I think the US Senate passing legislation to end the brief shutdown over the weekend has helped,” he said.

Both oil benchmarks fell more than 2 per cent last week on concerns about global economic growth and oil demand after the US central bank signalled caution over further easing of monetary policy. Research from Asia’s top refiner Sinopec pointing to China’s oil consumption peaking in 2027 also weighed on prices.

Concerns about European supply eased on reports the Druzhba pipeline, which sends Russian and Kazakh oil to Hungary, Slovakia, the Czech Republic and Germany, has restarted after halting on Thursday due to technical problems at a Russian pumping station.

Shipments resumed on Saturday, according to Belarus’ BelTa state news agency. On Sunday, Hungarian Foreign Minister Peter Szijjarto said supplies on Druzbha to the country had restarted.

Before the halt, the pipeline was shipping 300,000 barrels per day of crude.

US president-elect Donald Trump on Friday urged the European Union to increase US oil and gas imports or face tariffs on the bloc’s exports.

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Oil steady as markets weigh Fed rate cut expectations, Chinese demand

The European Commission said it was ready to discuss with Trump how to strengthen what it described as an already strong relationship, including in the energy sector.

Trump also threatened to reassert US control over the Panama Canal on Sunday, accusing Panama of charging excessive rates to use the Central American passage and drawing a sharp rebuke from Panamanian President Jose Raul Mulino.

In the US, the number of operating oil rigs were up one to 483 last week, the highest since September, Baker Hughes reported on Friday. REUTERS