SINGAPORE: Oil prices nudged higher on Thursday, the first day of trade for 2025, as investors returning from holidays cautiously eyed a recovery in China's economy and fuel demand following a pledge by President Xi Jinping to promote growth.
Brent crude futures rose 17 cents, or 0.06%, to $74.82 a barrel by 0547 GMT after settling up 65 cents on Tuesday, the last trading day of 2024. US West Texas Intermediate (WTI) crude futures gained 19 cents, or 0.26%, to $71.91 a barrel after closing 73 cents higher in the previous session.
China's Xi said on Tuesday in his New Year's address that the country would implement more proactive policies to promote growth in 2025.
China's factory activity grew in December, according to the private-sector Caixin/S&P Global survey on Thursday, but at a slower-than-expected pace amid concerns over the trade outlook and risks from tariffs proposed by US President-elect Donald Trump.
The data echoed an official survey released on Tuesday that showed China's manufacturing activity barely grew in December, though services and construction recovered. The data suggested policy stimulus is trickling into some sectors as China braces for new trade risks.
Traders are returning to their desks and likely weighing higher geopolitical risks along with the impact of Trump running the US economy "red hot" versus the impact of tariffs, said Tony Sycamore, a market analyst at IG.
"Tomorrow's US ISM manufacturing release will be key to crude oil's next move," Sycamore added.
He also noted that WTI's weekly chart is winding into a tighter range, which suggests a significant move is imminent. "Rather than trying to predict which way the break will occur, we would be inclined to wait for the break and then go with it," he said.
Investors are also awaiting weekly US oil stock data from the Energy Information Administration, which has been delayed until Thursday due to the New Year holiday.
US crude oil and distillate stockpiles are expected to have fallen last week, while gasoline inventories likely rose, according to an extended Reuters poll on Tuesday.
US oil demand surged to the highest levels since the pandemic in October at 21.01 million barrels per day (bpd), up about 700,000 bpd from September, EIA data showed on Tuesday. Crude output from the world's top producer rose to a record 13.46 million bpd in October, up 260,000 bpd from September, the report revealed.
In 2025, oil prices are likely to remain constrained near $70 a barrel, marking a third consecutive year of decline after a 3% drop in 2024. Weak Chinese demand and rising global supplies are expected to offset efforts by OPEC+ to shore up the market, according to a Reuters monthly poll.
In Europe, Russia halted gas exports via Soviet-era pipelines running through Ukraine on New Year's Day. The widely expected stoppage will not impact prices for EU consumers as some buyers have arranged alternative supplies. Hungary will continue receiving Russian gas via the TurkStream pipeline under the Black Sea. — Reuters
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