HG MARKETS:

Friday saw a minor decline in oil prices in Asian trade, but they were expected to have a strong weekly performance as OPEC+ postponed plans to boost output. The possibility of additional supply interruptions in the United States also helped. A strong surge throughout financial markets was also triggered by Donald Trump’s victory in the 2024 presidential election, and oil markets were optimistic as they awaited additional clues on fiscal stimulus in top importer China. Due to Israel’s ongoing attack against Hamas and Hezbollah in Gaza and parts of Lebanon, traders also maintained a certain level of risk premium in oil prices due to the ongoing Middle East conflict. West Texas Intermediate crude futures dropped 0.3% to $71.72 a barrel, while Brent oil futures expiring in January declined 0.3% to $75.44 a barrel. This week, both contracts saw gains of 3% to 4%.

The Organization of Petroleum Exporting Countries and Allies (OPEC+) said this week that it will postpone plans to start increasing output in December, which was the largest boost to the oil markets. In order to support prices, the cartel had cut production by around 6 million barrels per day over the previous two years, and these cuts are now expected to last longer. Oil prices this week were also boosted by caution over Hurricane Rafael, as the storm moves through the oil-rich Gulf of Mexico, forcing numerous energy operators to abandon their operations. The National People’s Congress gathering in China, where the body is generally expected to present more stimulus measures, was now the main focus of the oil markets.

The summit is scheduled to end on Friday, having started earlier this week. Over the past month, Beijing has unveiled a number of fiscal and monetary policies geared at stimulating the economy. However, the NPC must authorize greater fiscal spending, which is what it is set to do this week. The world’s largest oil importer’s economy is expected to develop, which would boost the new spending, which analysts predict will total at least 10 trillion yuan ($1.6 trillion).