Oil prices saw a slight increase on the first trading day of 2025, with Brent crude rising by 16 cents to $74.80 a barrel and U.S. West Texas Intermediate crude gaining 16 cents to $71.88.
Investors are closely watching China’s economic and fuel demand outlook after President Xi Jinping’s pledge to stimulate growth, according to Reuters.
In his New Year’s address, Chinese President Xi stated that China would adopt more proactive policies in 2025 to foster economic growth.
This commitment has led to cautious optimism among investors, especially concerning the country’s fuel demand and broader economic outlook.
China’s factory activity showed growth in December, according to the Caixin/S&P Global survey, but the expansion was slower than expected due to concerns over trade and potential risks from U.S. President-elect Donald Trump’s proposed tariffs.
The official survey from earlier in the week also indicated minimal growth in manufacturing, although services and construction saw recovery.
An IG market analyst, Tony Sycamore, noted that traders are likely considering the balance between higher geopolitical risks and the potential effects of U.S. President-elect Donald Trump’s economic policies.
Specifically, he highlighted the challenges of running the U.S. economy “red hot” while also navigating the potential impact of tariffs.
“Tomorrow’s US ISM manufacturing release will be key to crude oil’s next move,” Sycamore added.
Sycamore pointed out that the weekly chart for WTI crude oil is narrowing into a tighter range, indicating that a significant price movement may be imminent.
“Rather than trying to predict in which way the break will occur, we would be inclined to wait for the break and then go with it,” he noted.
