Oil prices edged up during thin holiday trading on Monday, reflecting cautious optimism as traders awaited key economic data from China and the United States.
Expectations for Chinese economic growth and strong U.S. demand underpinned the market, even as uncertainties surrounding political conflicts and global confidence lingered.
Picture: Crude oil consolidates near 70.63, testing resistance at 70.73 as bullish momentum moderates, as seen on the VT Markets app.
Oil climbed by 1.43%, with prices recovering from early session lows near 69.32. The MACD line remains above its signal line, although the histogram shows a reduction in bullish momentum as prices approach resistance at 70.733.
The rally was largely driven by a sharper-than-expected drawdown in U.S. crude inventories during the week ending December 20, as refiners ramped up operations to meet the seasonal boost in fuel demand.
The lower inventory levels and optimism surrounding China’s economic recovery have kept traders cautiously bullish heading into 2025.
China’s economic outlook has taken centre stage, with multiple factors pointing to a recovery that could bolster global oil demand. The Chinese government announced plans to issue a record 3 trillion yuan ($411 billion) in special treasury bonds in 2025, aimed at reviving growth in the world’s second-largest economy and top oil importer.
Further supporting oil demand expectations, China has allocated 152.49 million metric tons of crude import quotas to independent refiners for 2025 in its second batch of allowances.
This substantial quota reflects a forward-looking stance by the government to ensure steady energy supplies for its recovery initiatives.
Market participants are keenly watching economic data due this week to gauge the trajectory of oil demand. China’s PMI factory activity surveys, scheduled for release on Tuesday, are expected to provide critical insights into the effectiveness of recent economic stimulus efforts.
Any signs of a rebound in factory output could signal stronger oil demand in the near term.
On Friday, the U.S. ISM manufacturing index for December will offer a snapshot of industrial activity in the world’s largest oil consumer.
Given the recent drawdown in U.S. crude inventories and steady industrial production, the data could further support oil prices if it points to robust demand.
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