Oil prices rose in Asian trading on Tuesday, supported by positive sentiment from Chinese manufacturing data. However, trading activity was subdued on the final day of the year as investors evaluated prospects for the upcoming year.
By 21:05 ET (02:05 GMT), Brent Oil Futures climbed 0.7% to $74.51 per barrel, while February Crude Oil WTI Futures also gained 0.7%, reaching $71.05 per barrel.
Thin trading volumes were observed as many institutional participants took time off for the holiday season. Additionally, year-end profit-taking and portfolio adjustments further dampened activity.
Focus on Chinese Manufacturing Data and Upcoming U.S. ISM Survey
China’s manufacturing sector showed growth in December for the third consecutive month, supported by recent stimulus measures, according to purchasing managers index data. However, the expansion was slower than market expectations.
The outlook for oil demand remains tied to China’s economic recovery, as the country is the world’s largest oil importer. Concerns about potential oversupply persist, driven by anticipated production increases from non-OPEC nations.
Market participants are also awaiting details on Beijing’s fiscal stimulus plans for the coming year, with reports indicating a potential increase in government spending to bolster growth. Meanwhile, traders are looking ahead to the U.S. ISM survey for December, due Friday, for insights into economic activity in the world’s largest energy consumer.
Oil Set for Annual Declines Amid Demand and Supply Concerns
Despite Tuesday’s gains, both Brent and WTI are poised for yearly losses. WTI is expected to decline by nearly 1%, while Brent is on track for a 4% drop, as ongoing uncertainty about China’s economic outlook and fears of oversupply weigh on the market.The International Energy Agency (IEA) recently increased its demand forecast for the coming year but reiterated that the oil market is expected to remain adequately supplied.
Data from the Energy Information Administration (EIA) indicates that U.S. oil production remains near record highs. The incoming Donald Trump administration is expected to prioritize policies aimed at boosting domestic fossil fuel production.
Market participants remain cautious amid broader economic concerns, including weaker-than-anticipated demand growth in China—a key driver of global oil consumption. China’s contracting oil demand highlights concerns about a potential oversupply scenario.
Traders are increasingly wary about the outlook for 2025, as rising production and sluggish demand recovery continue to pressure market balance sheets.
