Oil prices saw a rise on Tuesday, supported by positive Chinese manufacturing data. The increase in China’s purchasing managers index lifted market sentiment. Both Brent Oil Futures and WTI Crude Futures gained 0.7% in Asian trading.
However, trading volumes remained thin due to the holiday season. Year-end profit-taking and portfolio rebalancing also contributed to reduced market activity.
China, the largest oil importer, expanded its manufacturing sector for the third consecutive month in December. Despite this, the pace of expansion fell short of expectations. Fresh stimulus measures provided critical support to industrial growth, but the market still needs clarity on Beijing’s economic plans for the next year.
Reports suggest increased fiscal spending to boost China’s economy, which could stabilize oil demand. The hope of a sustained economic revival in China is crucial for maintaining oil price momentum.
The U.S. ISM survey, set to release this Friday, will also play a key role in shaping oil market dynamics. Traders anticipate clues regarding economic activity in the world’s largest energy consumer. Positive data could offset concerns about oversupply from non-OPEC producers.
Despite the recent uptick, oil prices are on track for yearly declines. WTI Crude Futures are expected to slip nearly 1%, while Brent Oil Futures could see a 4% annual drop. Concerns about China’s economic outlook and a potential oversupply weigh heavily on the market.
The International Energy Agency recently revised its oil demand forecast upward for the coming year. However, it maintained that supply levels will likely remain adequate. Meanwhile, U.S. oil production hovers near record highs, contributing to oversupply fears.
Weaker-than-expected demand growth in China continues to challenge the global oil market. China’s contracting oil demand underscores ongoing oversupply concerns. Rising production levels, coupled with tepid demand recovery, could strain market balances in 2025.
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Oil prices rise as Chinese manufacturing activity boosts sentiment. Learn how demand and oversupply concerns shape market trends.
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