January 02, 2025 (MLN): Oil prices nudged higher on Thursday, the first day of trade for 2025. Investors returning from holidays cautiously eyed a recovery in China's economy and fuel demand.
This optimism was fueled by a pledge from President Xi Jinping to promote growth.
Brent crude futures increased by $0.14, or 0.19%, to $74.78 per barrel.
West Texas Intermediate (WTI) crude futures increased $0.18, or 0.25%, to $71.90 per barrel by [11:53 am] PST.
China's Xi said on Tuesday in his new year's address that the country would implement more proactive policies to promote growth in 2025.
China's factory activity grew in December, according to the private-sector Caixin/S&P Global survey on Thursday.
However, the growth was at a slower-than-expected pace amid concerns over the trade outlook, as Reuters reported.
Risks from tariffs proposed by U.S. President-elect Donald Trump also contributed to the uncertainty surrounding the economic situation.
The data echoed an official survey released on Tuesday that showed China's manufacturing activity barely grew in December, though services and construction recovered.
The data suggested policy stimulus is trickling into some sectors as China braces for new trade risks.
Reuters further added that traders are returning to their desks and probably weighing higher geopolitical risks.
Additionally, they are considering the impact of Trump running the U.S. economy red hot versus the effect of tariffs, according to IG market analyst Tony Sycamore.
"Tomorrow's US ISM manufacturing release will be key to crude oil's next move," Sycamore added.
Sycamore said WTI's weekly chart is winding itself into a tighter range, which suggests a big move is coming.
"Rather than trying to predict in which way the break will occur, we would be inclined to wait for the break and then go with it," he added.
Investors are also awaiting weekly U.S. oil stocks data from the Energy Information Administration which has been delayed until Thursday due to the new year holiday.
U.S. crude oil and distillate stockpiles are expected to have fallen last week while gasoline inventories likely rose, an extended Reuters poll showed on Tuesday.
U.S. oil demand surged to the highest levels since the pandemic in October at 21.01 million barrels per day (bpd).
This was up about 700,000 bpd from September, according to EIA data released on Tuesday.
Crude output from the world's top producer rose to a record 13.46m bpd in October, up 260,000 bpd from September, the report showed.
In 2025, oil prices are likely to be constrained near $70 a barrel, down for a third year after a 3% decline in 2024.
Weak Chinese demand and rising global supplies are expected to offset efforts by OPEC+ to shore up the market, a Reuters monthly poll showed.
In Europe, Russia halted gas exports via Soviet-era pipelines running through Ukraine on new year's day.
The widely expected stoppage will not impact prices for consumers in the European Union, as some buyers have arranged alternative supply.
Hungary will keep receiving Russian gas via the TurkStream pipeline under the Black Sea.
Copyright Mettis Link News
Posted on: 2025-01-02T12:03:31+05:00
