Oil rises as investors return from holiday, eyeing China’s recovery Reuters

by Florence Tan

SINGAPORE (Reuters) – Oil prices rose on Thursday, the first trading day of 2025, as investors returning from holidays cautiously watched China’s economic recovery and oil demand following President Xi Jinping’s pledge to boost growth.

It was up 46 cents, or 0.6%, at $75.10 a barrel by 0128 GMT after settling at 65 cents on Tuesday, the last day of trading for 2024. U.S. West Texas Intermediate crude futures gained 49 cents, or 0.7%, to $72.21 a barrel. Closing 73 cents higher in the previous session.

China’s Xi announced in his New Year’s speech on Tuesday that the country will implement more proactive policies to boost growth by 2025.

According to a survey released on Tuesday, China’s manufacturing activity grew in December even as services and construction recovered. The policy stimulus is trickling into some sectors, suggested as China backs tariffs proposed by US President-elect Donald Trump for new trade concerns.

Traders are returning to their desks and perhaps weighing heightened geopolitical risks and the impact of Trump’s handling of the US economy against the impact of tariffs, IG market analyst Tony Sycamore said.

He added: “Today’s China Caixin PMI release and tomorrow’s US ISM manufacturing release will be key to future crude oil activity.”

Sycamore said WTI’s weekly chart is curling itself into a tight range, indicating a big move is coming.

“Instead of trying to predict which way the break will go, we wait for our break and go with it,” he added.

Investors are also awaiting weekly US oil inventory data from the Energy Information Administration, which has been delayed until Thursday due to the New Year’s holiday.

Oil and distillate stockpiles are expected to have fallen last week, while gasoline inventories are likely to rise, an extended Reuters poll showed on Tuesday. (EIA/S)

U.S. oil demand rose to its highest level since the outbreak of the pandemic in October at 21.01 million barrels (bpd), up 700,000 bpd from September, EIA data showed on Tuesday.

Crude from the world’s top producer rose to a record 13.46 million bpd in October, up 260,000 bpd from September, the report said.

In the year Oil prices could hover around $70 a barrel in 2025, after a 3% drop in 2024, a third straight year of declines, as weak Chinese demand and rising global supplies offset efforts by OPEC+ to prop up the market, a Reuters monthly poll showed.

In Europe, Russia halted gas exports on New Year’s Day following the construction of a Soviet-era pipeline through Ukraine. The widely expected shutdown will not affect prices for consumers in the EU as some buyers have set up alternative supplies, while Hungary will continue to receive Russian gas through the Turkish Stream pipeline under the Black Sea.