Oil markets received a boost ahead of the new year as crude inventories in the US fell by 4.2 million barrels, leading to a marginal increase in futures prices. The US Energy Information Administration reported that refiners increased production to meet higher fuel demand during the festive season.
The Brent front month crude futures contract settled $0.91 higher at $74.17 per barrel, while West Texas Intermediate futures contract rose by $0.98 to $70.60 per barrel. However, some analysts attribute this surge to optimism over China’s potential economic growth in 2025, with the World Bank upgrading its forecast from 4.8% to 4.9%.
China’s upgraded growth projection and plans for a record treasury bond issuance may boost oil demand, but market doubts persist due to concerns about consumer confidence, high debt levels, and an aging population. Sinopec recently stated that China’s crude imports could peak as soon as next year, with a potential decline in diesel and gasoline consumption by 2027.
The Brent benchmark is still down by over 3% year-to-date and 7% on a 12-month basis, but the recent price increase may be a temporary respite before market conditions return to normal.
Source: https://www.forbes.com/sites/gauravsharma/2024/12/27/last-us-crude-inventory-data-of-2024-lifts-oil-prices-by-over-1