Oil Prices Rise Ahead of Key Economic Data
As the year comes to a close, oil prices are on the upswing, driven by anticipation of crucial economic data from China and the United States. In thin trading, Brent crude futures climbed 26 cents to $74.43 a barrel, while the more active March contract rose 44 cents to $74.23 a barrel. U.S. West Texas Intermediate crude also gained 58 cents to $71.18 a barrel.
Investors Await Key Indicators
Market participants are eagerly awaiting China’s PMI factory surveys, set to be released on Tuesday, and the U.S. ISM survey for December, due out on Friday. These indicators will provide valuable insights into the growth prospects of the world’s two largest oil consumers.
Last Week’s Gains
Both Brent and WTI crude oil prices surged about 1.4% last week, buoyed by a larger-than-expected drawdown from U.S. crude inventories. Refiners ramped up activity, and the holiday season boosted fuel demand, contributing to the gains.
Refining Capacity to Decrease
According to research company IIR Energy, available capacity at U.S. oil refiners is expected to decrease by 108,000 bpd in the week ending January 3. This reduction in capacity will likely support oil prices.
Chinese Economic Growth Prospects
Optimism surrounding Chinese economic growth in 2025 is also lifting oil prices. The country’s authorities have agreed to issue a record 3 trillion yuan ($411 billion) in special treasury bonds next year, which is expected to revive growth. As the top crude oil importing nation, China’s economic performance has a significant impact on global oil demand.
Expert Insights
Ryan Fitzmaurice, senior commodity strategist at Marex, notes that “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.” He adds that “going forward, China economic data is expected to improve as the recent stimulus measures take hold in 2025. Also, lower rates in the U.S. and elsewhere should be supportive of oil consumption.”
World Bank Raises Forecast
The World Bank has revised its forecast for China’s economic growth in 2024 and 2025, citing the country’s stimulus measures. However, the bank warns that subdued household and business confidence, along with headwinds in the property sector, will remain a drag on growth next year.
Leave a Reply