Oil Prices Tick Up Amid Thin Holiday Trade and Market Optimism
Oil prices edged slightly higher on Monday during thin holiday trading, as traders awaited key economic data from China and the U.S.—the world’s two largest oil consumers—to assess potential growth prospects.
By 0430 GMT, Brent crude futures rose by 5 cents to $74.22 per barrel, while the more active March contract was up 3 cents at $73.82 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude gained 3 cents, settling at $70.63 per barrel.
Both benchmarks recorded gains of around 1.4% last week, driven by a larger-than-expected drawdown in U.S. crude inventories for the week ending December 20. This drop reflected increased refining activity and heightened fuel demand during the holiday season.
Optimism for Chinese Growth Supports Prices
Oil markets received a boost from expectations of stronger Chinese economic growth in 2025, which could lead to increased demand from the top global crude importer. Last week, reports indicated that Chinese authorities plan to issue a record 3 trillion yuan ($411 billion) in special treasury bonds to stimulate growth next year.
“Global oil consumption reached an all-time high in 2024 despite China underperforming expectations, and oil stockpiles are heading into next year at relatively low levels,” said Ryan Fitzmaurice, senior commodity strategist at Marex.
Fitzmaurice added, “China’s economic data is expected to improve as recent stimulus measures take effect in 2025. Additionally, lower interest rates in the U.S. and other regions should support oil consumption.”
China has also issued 152.49 million metric tons of crude oil import quotas for independent refiners in a second batch for 2025, trade sources revealed on Monday.
Read more: International Oil Prices Hit 2.5-Month Low
Mixed Signals from Economic Reports
The World Bank recently raised its forecast for China’s economic growth for both 2024 and 2025. However, it cautioned that subdued household and business confidence, along with persistent challenges in the property sector, could weigh on growth.
Investors are now turning their attention to China’s PMI factory surveys, set to be released on Tuesday, and the U.S. ISM survey for December, expected on Friday. These reports will provide further insights into manufacturing activity and economic momentum in the two countries.
European Gas Dynamics Shift
In Europe, hopes for a renewed deal to transit Russian gas through Ukraine are diminishing. Russian President Vladimir Putin announced last week that there was no time left in 2024 to finalize a new agreement.
As a result, analysts anticipate Europe will increasingly rely on liquefied natural gas (LNG) imports to replace piped Russian gas, further reshaping the region’s energy landscape.
Looking Ahead
With oil stockpiles trending lower and optimism for economic recovery in key markets, traders are cautiously optimistic about demand growth in 2025. However, geopolitical risks and the trajectory of global economic policies remain key factors that could influence oil prices in the months ahead.
