Brent and WTI crude oil prices have risen, with Brent reaching $75.10 and WTI at $72.21 per barrel. China’s economic policies and recent manufacturing data highlight a mixed recovery, impacting market sentiment. Analysts are closely watching geopolitical risks and upcoming economic indicators, including U.S. oil inventory data. Predictions for 2025 suggest oil prices may stabilize around $70 due to weak demand from China and increased global supply. Meanwhile, Russia’s gas export disruptions are not expected to significantly affect EU prices.
Brent and WTI Crude Oil Prices Rise
Brent crude oil futures experienced an uptick of 46 cents, or 0.6%, reaching $75.10 a barrel at 0128 GMT. This follows a 65-cent increase on the previous trading day. Meanwhile, West Texas Intermediate (WTI) crude futures rose by 49 cents, or 0.7%, to settle at $72.21 a barrel after a 73-cent gain in the session prior.
Market Insights and Future Projections
In his New Year address, Chinese President Xi announced plans for more aggressive policies aimed at stimulating growth in 2025. A recent official survey indicated that while Chinese manufacturing growth was minimal in December, there was a rebound in the services and construction sectors. This highlights the effectiveness of policy stimulus measures as China braces for potential trade challenges from U.S. tariffs.
Market analyst Tony Sycamore from IG pointed out that traders are returning to monitor the heightened geopolitical risks and assess the impact of potential tariffs on the U.S. economy. He emphasized the significance of upcoming data releases, including the Caixin PMI index from China and the ISM manufacturing index from the U.S., which are expected to influence crude oil prices.
Sycamore also noted that the weekly WTI chart is tightening, indicating that a major price movement may be on the horizon. He advises waiting for a clear breakout before deciding on the direction of trading.
Investors are also keenly anticipating the U.S. oil inventory data from the Energy Information Administration (EIA), which has been rescheduled for Thursday due to the New Year holiday. According to a Reuters poll, it is expected that U.S. crude oil and distillate stocks will have decreased, while gasoline inventories may see an increase.
As of October, U.S. oil demand hit its peak since the pandemic, reaching 21.01 million barrels per day, reflecting an increase of approximately 700,000 bpd from September. Additionally, the U.S. crude production reached an all-time high of 13.46 million bpd in October, surpassing the previous month by 260,000 bpd.
Looking ahead, projections for 2025 suggest that oil prices may stabilize around $70 a barrel, marking a decline for the third consecutive year following a 3% drop in 2024. This is largely attributed to weak demand from China and a rise in global supply, which counterbalance OPEC+ efforts to stabilize the market.
In a related development, Russia halted gas exports through its Soviet-era pipelines crossing Ukraine on New Year’s Day. Although this interruption was anticipated, it is not expected to significantly affect prices for consumers in the European Union, as many buyers have diversified their supply sources. Hungary will continue to receive Russian gas through the TurkStream pipeline, which operates beneath the Black Sea.