Crude oil futures started the New Year with slight gains as markets aimed to build on a positive close to 2024.
As of 0810 GMT, March 2025 ICE Brent futures were trading at $74.94 per barrel, up from Tuesday’s settlement of $74.64. The March/April 2025 spread was valued at around $0.40 per barrel.
Meanwhile, February 2025 NYMEX WTI futures were priced at $71.95 per barrel, slightly higher than the pre-holiday close of $71.72.
The final days of December 2024 saw both major crude benchmarks gain about $3 per barrel, reflecting optimism at the year’s end. This was largely driven by renewed expectations that China’s economy will recover after the government announced a series of stimulus measures aimed at boosting growth.
Chinese President Xi Jinping stated this week that the country’s economy is set to expand by 5% in 2025, aligning with official growth targets. He also downplayed concerns that the incoming Trump administration’s tariffs could harm China’s prospects. Xi described China’s economy as “overall stable and progressing,” adding that risks in key sectors had been effectively addressed.
Despite these optimistic statements, analysts remain cautious about China’s economic outlook. The country faces challenges from potential trade restrictions, and the struggling property sector continues to weigh on the broader economy.
In December, China’s factory activity grew, but at a slower pace than expected, according to a Caixin/S&P Global manufacturing survey. The Purchasing Managers’ Index (PMI) dropped to 50.5 from 51.5 the previous month, falling short of analysts’ forecasts of 51.7. The decline was attributed to weaker export orders, reflecting concerns over the global trade environment.
In addition to economic factors, the energy market was buoyed by forecasts of a sharp drop in temperatures for January, which could increase heating demand. Oil investors are also closely watching natural gas prices, which led the late-2024 rally as both US and European benchmarks hit yearly highs.
Markets also received support from expectations of production discipline within OPEC+ members, who have delayed planned output increases in line with the group’s quotas.
Additionally, the incoming Trump administration is expected to tighten sanctions on Iran and possibly Venezuela, further limiting global oil supply. This follows recent US and European efforts to clamp down on Russia’s shadow shipping fleet.
However, oil prices face some challenges. The surging US dollar has made oil imports more expensive for countries outside the dollar zone. The US Dollar Index rose more than 2.5% in December, marking its third consecutive month of gains. The index remains in a consolidation phase, slightly below a 26-month high of 108.50 reached on the last day of 2024, according to FXStreet analyst Eren Sengezer.
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