Crude oil prices saw a modest rise today as traders grew more optimistic following news of new stimulus measures from the Chinese government aimed at boosting consumer spending.
At the time of writing, Brent crude was priced at $73.80 per barrel, and West Texas Intermediate (WTI) was trading at $70.32 per barrel. Both saw an increase from the opening prices in Asia after China’s finance ministry announced a new funding package. This package will focus on higher pensions, medical insurance, and trade-ins for consumer goods.
The stimulus is part of a broader effort to stimulate the Chinese economy. Similar measures in the past have raised expectations of higher oil demand, which has, in turn, fueled optimism among oil traders. “Hopes for China’s stimulus measures are supporting the market,” said Satoru Yoshida, an analyst at Rakuten Securities. “Expectations for increased fossil fuel production and demand, especially after Donald Trump takes office as U.S. President next month, are also helping to lift oil prices,” Yoshida added.
Chris Weston, head of research at Pepperstone Group, pointed out that while it’s common to see volatility at this time of year, there is still strong buying activity in the market. “Despite the year-end fluctuations, those still placing orders are generally net buyers,” Weston told Bloomberg.
Along with the stimulus news from China, a report on U.S. crude oil inventories also supported oil prices. The American Petroleum Institute (API) reported on Tuesday that U.S. crude inventories had decreased by 3.2 million barrels in the second-to-last week of 2024. The Energy Information Administration’s official report is expected later today, with a Reuters poll suggesting that inventories could drop by 1.9 million barrels. The poll also predicts declines in fuel stocks, including 1.1 million barrels of gasoline and 300,000 barrels of middle distillates.
Looking ahead to 2025, the same factors that influenced oil prices in 2024 are expected to continue shaping the market. However, the upcoming presidency of Donald Trump is seen as a potential bearish factor, as his pro-oil and gas policies could impact prices.
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