Oil prices saw modest gains on Monday as trading activity remained light ahead of the year-end holiday season. Investors were closely awaiting key economic data from China and the United States later this week to gauge the outlook for growth in the world’s two largest oil consumers.
As of 04:30 GMT, Brent crude futures were up by 5 cents, reaching $74.22 per barrel, while the more actively traded March contract edged 3 cents higher to $73.82 per barrel. U.S. West Texas Intermediate (WTI) crude saw a similar increase, rising 3 cents to $70.63 per barrel.
Both contracts had posted a solid 1.4% gain the previous week, bolstered by a larger-than-expected decline in U.S. crude inventories for the week ending December 20. The drop was attributed to increased refinery activity and heightened fuel demand due to the holiday season.
Further supporting oil prices was growing optimism about China’s economic recovery in 2025, with expectations that increased demand from the world’s largest oil importer would help boost prices. Chinese authorities recently announced plans to issue a record 3 trillion yuan ($411 billion) in special treasury bonds next year to spur growth.
Ryan Fitzmaurice, senior commodity strategist at Marex, noted that global oil consumption had hit an all-time high in 2024, despite China’s economy underperforming relative to expectations. He added that oil inventories were expected to remain relatively low entering 2025. “Economic data from China is anticipated to improve as recent stimulus measures take effect, and lower interest rates in the U.S. and other regions should also help support oil consumption,” Fitzmaurice said.
In addition, China has already allocated 152.49 million metric tons of crude oil import quotas to independent refiners for 2025, with more expected in the coming weeks, according to trade sources.
Meanwhile, the World Bank raised its forecast for China’s economic growth in 2024 and 2025, although it cautioned that weak household and business confidence, along with challenges in the property sector, would continue to pose risks to the recovery.
Markets are closely monitoring China’s purchasing managers’ index (PMI) factory surveys, due for release on Tuesday, as well as the U.S. Institute for Supply Management (ISM) survey for December, which will be published on Friday. These data points will provide further insight into the economic performance of both nations.
In Europe, concerns over Russian gas supplies intensified as Russian President Vladimir Putin announced on Thursday that there would be no new deal on gas transit through Ukraine before the end of the year. The potential loss of Russian gas flows is expected to drive Europe to import more liquefied natural gas (LNG), according to analysts.
The combination of geopolitical uncertainty and the economic outlook from China and the U.S. will likely continue to influence oil market sentiment as 2024 approaches.
Related topic:
What Time Does Oil Futures Open?
