Oil prices edge higher amid thin year-end trading; set for yearly declines
2024.12.30 20:45
Investing.com– Oil prices inched higher in Asian Trade on Tuesday amid thin trading on the last day of the year, while investors were cautious as they assessed the outlook for the upcoming year.
At 19:43 ET (00:43 GMT), were steady at $74.13 a barrel, and expiring in February rose 0.3% to $70.73 a barrel.
Trading volumes were thin ahead of the new year’s start as many institutional investors and traders took time off during the holiday season. Additionally, year-end profit-taking and portfolio rebalancing reduce trading activity.
Chinese manufacturing data, U.S. ISM survey on tap
China is scheduled to release its latest on Tuesday, which would provide a glimpse at the strength of the second-largest economy in the world.
The outlook for oil demand hinges on the hope that China, the world’s largest oil importer, can revive its economy, especially as there are concerns about a potential oversupply due to expected increases in production from non-OPEC countries.
Markets are awaiting more clarity on Beijing’s plans for stimulus measures in the coming year. Recent reports suggested that the country will ramp up fiscal spending to support economic growth.
Additionally, the U.S. releases the for December on Friday, and traders will be seeking clues about the strength of economic activity in the world’s largest energy consumer.
Oil tracks yearly losses on demand outlook concerns
Both contracts were heading for annual declines, with WTI set to slip nearly 1% and dropping on track to lose nearly 4%, as traders remain wary about China’s economic outlook and the possibility of oversupply in the months ahead.
The International Energy Agency (IEA) had recently raised its demand forecast for next year but maintained its projection that the oil market will remain adequately supplied.
Latest Energy Information Administration (EIA) data has shown that U.S. oil production remains near record levels, and the incoming Donald Trump administration is likely to agree to policies that would focus on ramping up domestic fossil fuel production.
Market participants are also cautious about the broader economic concerns, including weaker-than-expected demand growth in China, traditionally a key driver for global oil consumption. China’s oil demand has been contracting, further underscoring the expected oversupply scenario.
Traders are concerned about the 2025 outlook as rising supply and tepid demand recovery weigh on the balance sheets.
