By Florence Tan
SINGAPORE (Reuters) – Oil prices rose to record highs on Thursday, the first trading day of 2025, as investors returning from vacations eyed China's economic recovery and fuel demand after President Xi Jinping's pledge to boost growth.
Futures rose 17 cents, or 0.06%, to $74.82 a barrel by 0547 GMT after settling down 65 cents on Tuesday, the last day of trading for 2024. US West Texas Intermediate crude futures gained 19 cents, or 0.26%, at 71.9 a barrel after settling at $71.9. to close 73 cents higher in the previous session.
China's Xi said on Tuesday in his New Year's address that the country will implement effective policies to promote growth by 2025.
China's factory activity grew in December, according to private sector Caixin/S&P Global on Thursday, but at a slower pace than expected amid concerns about the trade outlook and risks from tariffs proposed by US President-elect Donald Trump.
The data is in line with an official survey released on Tuesday that showed China's manufacturing activity grew weakly in December, although services and construction rebounded. The data suggest policy stimulus is entering certain sectors as China prepares for new trade risks.
Traders are returning to their desks and perhaps weighing higher geopolitical risks and the impact of Trump driving the US economy red hot against the impact of tariffs, IG analyst Tony Sycamore said.
“Tomorrow's US ISM release will be key to the next move in oil,” added Sycamore.
Sycamore said WTI's weekly chart is wrapping up in a tight range, indicating a big move is coming.
“Instead of trying to predict how the break will happen, we would like to wait for the break and then go with it,” he added.
Investors are also awaiting weekly crude oil data from the Energy Information Administration which has been delayed until Thursday due to the New Year holiday.
Oil and distillate stockpiles are expected to fall last week while gasoline inventories may rise, an extended Reuters poll showed on Tuesday. (EIA/S)
US oil demand rose to its highest level since the pandemic in October at 21.01 million barrels per day (bpd), up nearly 700,000 bpd from September, EIA data showed on Tuesday.
Crude output from the world's top producer rose to a record 13.46 million bpd in October, up 260,000 bpd from September, the report showed.
By 2025, oil prices are likely to be forced closer to $70 a barrel, down for a third year after falling 3% in 2024, as weak Chinese demand and increased global supply efforts by OPEC+ boost the market, a monthly Reuters poll found. he showed.
In Europe, Russia halted gas exports through Soviet-era pipelines through Ukraine on New Year's Day. The widely expected suspension will not affect prices for customers in the European Union as some customers have arranged for alternative supplies, while Hungary will continue to receive Russian gas through the TurkStream pipeline under the Black Sea.