Investing.com — Oil prices rose Thursday to start the new year on optimism about China’s economic growth and data showing U.S. oil inventories fell last week.
At 02:30 ET (19:30 GMT), the price rose 1.9% to $76.08 per barrel. U.S. West Texas Intermediate crude rose 2.2% to $73.32.
More Chinese stimulus measures are expected
The Chinese economy grew in December, a Caixin/S&P Global survey showed on Thursday, but at a slower pace than expected.
The data reflects an official survey published on Tuesday that showed Chinese manufacturing activity barely grew in December. However, the services and construction sectors fared better, with data suggesting policy incentives are trickling down to some sectors.
President Xi Jinping said in his New Year’s speech on Tuesday that China would adopt a more proactive policy to promote growth in 2025, and these data point to more stimulus in 2025.
API Reports Drop in US Oil Stocks
reported Tuesday that U.S. oil inventories fell by 1.4 million barrels last week.
A decline in US oil inventories signals an increase in oil demand, which could be good for crude prices. When supplies dwindle, traders can buy back into the oil market, which can push up prices.
The US (EIA), the statistical arm of the US Department of Energy, will release its weekly data later in the session.
Traders will wait to see if the official inventory report confirms the decline. These official figures provide insight into supply and demand dynamics in the U.S. crude oil market and influence prices and economic decisions.
The oil market is preparing for oversupply in 2025
Despite the drop in supplies, the latest EIA data shows that US oil production remains at record levels, and Donald Trump’s new administration is likely to agree to policies aimed at boosting domestic fossil fuel production.
The International Energy Agency recently said the oil market will remain adequately supplied despite forecast increases in demand for 2025.
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.
Traders remain cautious about the outlook as rising supply and tepid recovery in demand weigh on balance sheets.
(Peter Nurse contributed to this article.)
