Oil Prices Climb on China Growth Hopes as Markets Reopen for 2025
Oil prices rose on Thursday as traders returned for the first session of the new year, buoyed by optimism surrounding China’s economic outlook and fuel demand following President Xi Jinping’s pledge to stimulate growth.
By 1205 GMT, Brent crude futures had climbed $1.04, or 1.39%, to $75.68 a barrel, building on a 65-cent gain during the final trading day of 2024. U.S. West Texas Intermediate (WTI) crude advanced $1.02, or 1.42%, reaching $72.74.
In his New Year’s address, Xi reaffirmed China’s commitment to implementing proactive policies aimed at bolstering economic growth in 2025. This sentiment was reinforced by new data showing that China’s factory activity expanded in December, albeit at a slower pace than expected, according to a Caixin/S&P Global survey. The results mirrored official figures released earlier in the week, which pointed to sluggish manufacturing growth but stronger performance in services and construction.
Some market participants view weaker economic data as potentially bullish for oil prices, speculating that Beijing could accelerate stimulus measures in response to economic headwinds.
Analyst Tony Sycamore from IG noted that traders are likely assessing heightened geopolitical risks alongside expectations for robust U.S. economic performance under President-elect Donald Trump, despite concerns about the trade implications of proposed tariffs.
Sycamore highlighted the importance of the upcoming U.S. ISM manufacturing data release, which could significantly influence crude prices. He observed that WTI’s technical indicators suggest an imminent breakout, though the direction remains uncertain.
Weekly oil inventory data from the U.S. Energy Information Administration (EIA), delayed until Thursday due to the New Year holiday, will also be closely watched. Preliminary estimates suggest that crude and distillate stockpiles may have declined, while gasoline inventories likely increased.
EIA figures released earlier this week showed that U.S. oil demand in October hit 21.01 million barrels per day (bpd), the highest level since the pandemic, with output reaching a record 13.46 million bpd.
Despite the recent uptick, a Reuters poll indicated that oil prices may remain under pressure, averaging around $70 per barrel in 2025, marking a third consecutive year of declines. Analysts attribute this outlook to weak Chinese demand and rising global supplies, which could offset efforts by OPEC+ to stabilize the market.
In Europe, Russia halted gas exports through Ukraine after the expiration of a transit deal on December 31. While the European Union has arranged alternative supplies in anticipation of the disruption, Hungary will continue receiving Russian gas through the TurkStream pipeline under the Black Sea.
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