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Oil prices edged lower on Monday in light holiday trading as markets awaited key economic data from China and the U.S., the world’s two largest oil consumers, to gauge future growth prospects.
Price Movement
- Brent crude futures slipped 8 cents to $74.09 a barrel by 0700 GMT, while the more actively traded March contract was down 6 cents to $73.73 a barrel.
- West Texas Intermediate (WTI) crude fell 5 cents to $70.55 a barrel.
Despite Monday’s dip, both contracts gained about 1.4% last week, driven by an unexpected drawdown in U.S. crude inventories as refiners ramped up activity and holiday travel boosted fuel demand.
China’s Role in Demand Optimism
China’s economic outlook remains a focal point for oil traders, with expectations of growth driven by recent stimulus measures. Authorities have committed to issuing a record 3 trillion yuan ($411 billion) in special treasury bonds in 2025 to support economic expansion. Additionally, independent refiners have received 152.49 million metric tons of crude oil import quotas for 2025, underscoring robust demand forecasts.
Ryan Fitzmaurice, senior commodity strategist at Marex, highlighted that global oil consumption reached an all-time high in 2024, despite China’s underwhelming performance. He added, “Improving Chinese economic data and lower interest rates globally should support oil consumption in 2025.”
The World Bank has also revised its growth forecasts for China for 2024 and 2025, though it cautioned about persistent challenges, including weak household confidence and headwinds in the property sector.
Upcoming Data Releases
Investors are watching closely for:
- China’s PMI factory surveys due on Tuesday.
- U.S. ISM survey for December, set for release on Friday.
These indicators will provide insights into manufacturing activity and economic momentum in the two leading economies.
European Energy Dynamics
In Europe, hopes of a new agreement for Russian gas transit through Ukraine have diminished. Russian President Vladimir Putin stated last week that time had run out to sign a deal this year. Analysts expect the loss of piped Russian gas to increase Europe’s reliance on liquefied natural gas (LNG) imports.
Outlook
With low global oil inventories heading into 2025, optimism for Chinese demand recovery, and supportive monetary policy in major economies, oil prices are expected to remain resilient despite near-term challenges. However, continued monitoring of economic data and geopolitical developments will be critical.
