Oil records weekly gains thanks to cold weather and China’s policies

Oil prices rose last week, with increased demand as a result of cold weather in Europe and the United States, as well as additional economic stimulus announced by China.

Signs of the fragility of the Chinese economy have raised expectations of measures to boost growth in the world’s largest oil importer.

During the past week, Brent crude achieved gains of 2.4 percent, and West Texas Intermediate crude also recorded gains of about five percent.

As for Friday trading, Brent crude futures rose by 58 cents, or 0.8 percent, to $76.51 per barrel at settlement, the highest level since October 14.

US West Texas Intermediate crude also rose 83 cents, or 1.13 percent, to $73.96, the highest level since October 11.

John Kilduff, partner at Again Capital in New York, said: “China is not stopping at this stage in announcing its attempt to stimulate economic activity, and the market is watching that.”

He added that fears of weak Chinese demand were one of the factors behind assumptions of lower demand last year.

This week, China announced new measures to boost the growth of its economy with a surprise move to raise wages for government employees and announce a significant increase in financing from long-term Treasury bonds.

The additional financing will be used to stimulate business investment and consumption-boosting initiatives.

Oil prices are likely to receive some support from cold weather forecasts in some areas.

“Oil demand is likely to benefit from cold temperatures across Europe and the United States,” UBS analyst Giovanni Staunovo said.

Also supporting prices are the number of US oil rigs, an indicator of future production, and one rig fell to 482 this week, according to energy services company Baker Hughes.

Data from the US Energy Information Administration showed that crude inventories fell by 1.2 million barrels to 415.6 million barrels last week, which gave oil prices some support this week.

Fuel and distillate stocks jumped in the United States as refinery production increased, but demand for fuel hit its lowest level in two years.