Investing.com — Oil prices rose in Asian trading on Tuesday as Chinese manufacturing activity boosted sentiment, while trading was thin on the final day of the year as investors assessed the prospects for the year ahead.
At 21:05 ET (02:05 GMT), the price rose 0.7% to $74.51 per barrel, with the February expiring rate also up 0.7% to $71.05 per barrel.
Trading volumes were thin ahead of the start of the new year as many institutional investors and traders took time off over the holidays. In addition, year-end profit taking and portfolio rebalancing reduce trading activity.
Chinese production data in focus, American ISM research available
China’s manufacturing sector grew in December, but at a slower-than-expected pace. This marked the third straight month of expansion after a raft of new stimulus measures provided support, data showed on Tuesday.
The outlook for oil demand hinges on hopes that China, the world’s largest oil importer, can revive its economy, especially as concerns exist about possible oversupply due to expected production increases from non-EU OPEC countries.
Markets are waiting for more clarity on Beijing’s stimulus plans for the coming year. Recent reports have suggested that the country will increase fiscal spending to support economic growth.
In addition, the US releases December figures on Friday, and traders will be looking for clues about the strength of economic activity in the world’s largest energy consumer.
Oil tracks annual losses on concerns about demand prospects
Both contracts were headed for a year-over-year decline, with WTI set to fall nearly 1% and be on track to lose nearly 4%, as traders remain wary about China’s economic prospects and the possibility of oversupply in the coming months.
The International Energy Agency (IEA) had recently raised its demand forecast for next year, but maintained its expectation that the oil market will remain adequately supplied.
The latest data from the Energy Information Administration (EIA) shows that US oil production is near record levels, and Donald Trump’s new administration is likely to agree to policies aimed at boosting domestic fossil fuel production .
Market participants are also cautious about broader economic concerns, including weaker-than-expected demand growth in China, traditionally a key driver of global oil consumption. Chinese oil demand has shrunk, further underscoring the expected oversupply scenario.
Traders are concerned about the outlook for 2025 as rising supply and tepid recovery in demand weigh on balance sheets.
