Oil Set For Yearly Loss Despite Late Resurgence Of Geopolitical Concerns

Israel and Russia are back on the radar of jittery oil traders: File Image/Pixabay 

Ironically considering the persistent bearishness of oil traders, all it took to move the needle upward on Friday was something as ephemeral as a large stock draw in the U.S., which caused prices to settle above 1 percent.

The U.S. Energy Information Administration reported that  crude oil inventories fell by 4.2 million barrels in the week ended Dec. 20, which it attributed to increased demand during the holiday season and a boost in refining activity.

Accordingly, Brent settled up 91 cents, or 1.2 percent, at $74.17 per barrel, while West Texas Intermediate settled up 98 cents, or 1.4 percent, to $70.60 per barrel; crude is on track for a modest annual loss, thanks to trading being confined in a narrow band since mid-October.

Meanwhile, recently overlooked geopolitical tensions were said to have returned to trading considerations; specifically, NATO on Friday announced it would boost its presence in the Baltic Sea, after Finland seized a ship carrying Russian oil it suspected was causing power outages.

Also, Israel on Friday raided a north Gaza hospital one day after striking power stations, ports, and an airport linked to the Houthis in Yemen.

Bart Melek, head of commodity strategy at TD Bank, told media, "We're a little worried about events around the Red Sea and potentially getting shipments interrupted in the broader region."

Finally on Friday's thin trading session as the New Year approached, investors were said to have been buoyed by Beijing's attempt at speeding up economic growth in China through a series of stimulus packages, the latest of which will see the issue of the equivalent of a record $411 billion worth of special treasury bonds in 2025 – a debt issuance to soften the blow of a potential increase in U.S. tariffs and intended to boost consumption via subsidy programmes, equipment upgrades by businesses and funding investments in innovation-driven advanced sectors.

Also regarded as a bullish influence was the World Bank in the previous session raising its forecast for China's gross domestic product growth to 4.9 percent this year, up from its June forecast of 4.8 percent.

Mara Warwick, the bank's country director for China, said, "Improving local government finances will be essential to unlocking a sustained recovery."