Oil prices rise after Xi Jinping’s New Year’s statement
2 January 10:31
Oil prices rose slightly on January 2, the first trading day of 2025. Investors, having returned from the holidays, are cautiously watching China’s economic recovery and fuel demand after President Xi Jinping ‘s promise to promote economic growth. This was reported by "Komersant Ukrainian" with reference to Reuters.
Futures for Brent crude oil rose 17 cents (0.06%) to $74.82 per barrel after also rising 65 cents on Tuesday, the last trading day of 2024. West Texas Intermediate (WTI) futures added 19 cents (0.26%) to $71.91 per barrel after rising 73 cents in the previous session.
The Chinese factor
In his New Year’s address, Chinese President Xi Jinping said that the country will implement more active policies to stimulate growth in 2025.
According to a private survey by Caixin/S&P Global, China’s manufacturing activity grew in December, but at a slower-than-expected pace due to concerns about the trade outlook and risks from tariffs proposed by US President-elect Donald Trump.
These data confirm an official survey released on Tuesday, which showed that China’s manufacturing activity barely grew in December, although the services and construction sectors rebounded. The data suggests that stimulus policies are gradually penetrating some sectors as China prepares for new trade risks.
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The US factor
According to IG market analyst Tony Sikemore, traders are back to work and are likely weighing the increased geopolitical risks as well as the impact of Trump’s policies on the US economy, taking into account the impact of tariffs.
“Tomorrow’s report on the US ISM manufacturing index will be key to the next movement of oil prices,”
– sikemore said.
Investors are also awaiting weekly data on US oil inventories from the Energy Information Administration, which was postponed until January 2 due to the New Year holidays.
According to an expanded Reuters survey released on Tuesday, crude oil and distillate stocks in the US are expected to have declined last week, while gasoline stocks are likely to have increased.
US oil demand in October hit its highest level since the start of the pandemic at 21.01 million barrels per day, up about 700,000 barrels per day from September, EIA data showed on Tuesday. Oil production from the world’s largest producer hit a record 13.46 million barrels per day in October, up 260,000 barrels per day from September.
Market expectations
According to the monthly Reuters survey, oil prices are likely to be capped at around $70 per barrel in 2025, falling for the third consecutive year after falling 3% in 2024, as weak demand in China and rising global supplies offset OPEC’s efforts to support the market.
In Europe, Russia stopped gas exports through the Ukrainian gas transportation system on the first day of the new year. The widely expected shutdown will not affect prices for consumers in the European Union, as some buyers have arranged alternative supplies and Hungary will continue to receive Russian gas through the Turkish Stream pipeline under the Black Sea.
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