Oil prices steadied on Thursday in light holiday trading, with West Texas Intermediate (WTI) hovering near $70 a barrel. Earlier gains, driven by optimism around Chinese stimulus measures, were tempered by soft U.S. labor data that showed recurring unemployment benefits reaching a three-year high. Broader markets saw a muted response to the mixed economic signals.
China provided a boost to sentiment after announcing it would grant local officials greater flexibility to invest bond proceeds in economic development projects. Meanwhile, in the U.S., the American Petroleum Institute (API) reported a 3.2 million barrel drop in crude inventories last week, marking a potential fifth consecutive decline if official data corroborates. Seasonal patterns typically show crude stockpiles ebbing in December before replenishing in early January.
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Market Overview
- WTI crude steadied near $70 a barrel after a 1.2% gain in the prior session.
- Chinese stimulus and declining U.S. crude inventories buoy sentiment.
- Soft U.S. labor data casts a shadow over broader markets.
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Key Points
- API reports 3.2M barrel drop in U.S. crude stockpiles last week.
- China grants local officials leeway to invest government bond proceeds.
- Holiday trading volumes for WTI crude trend toward yearly lows.
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Looking Ahead
- Traders eye Beijing’s economic measures for sustained demand support.
- OPEC+ output policy and Trump’s upcoming presidency add uncertainty for 2025.
- Global supply dynamics will shape oil’s price trajectory in the new year.
- WTI crude steadied near $70 a barrel, supported by optimism around Chinese stimulus measures aimed at boosting economic development.
- The reported 3.2 million barrel drop in U.S. crude inventories signals tightening supply, which could support higher prices if confirmed by official data.
- Seasonal patterns typically show crude stockpiles ebbing in December, aligning with expectations for a short-term demand boost.
- China’s decision to grant local officials greater flexibility to invest bond proceeds may stimulate infrastructure spending, driving oil demand.
- OPEC+ policies remain cautious, helping to stabilize global supply and maintain price floors despite economic uncertainties.
- Soft U.S. labor data, including recurring unemployment benefits at a three-year high, raises concerns about slowing economic momentum and weaker oil demand.
- Holiday trading volumes for WTI crude are trending toward yearly lows, limiting price movements and leaving the market vulnerable to volatility.
- Uncertainty surrounding OPEC+ output policies and the incoming Trump administration’s energy strategy adds longer-term risks for oil markets in 2025.
- Global supply dynamics may shift unpredictably, with potential increases in production from non-OPEC countries weighing on prices.
- Mixed economic signals from the U.S. and China create uncertainty about sustained demand recovery heading into the new year.
Oil prices remain on track for a modest annual decline, with market dynamics shaped by cautious OPEC+ supply policies and geopolitical considerations. Heading into 2025, key drivers will include the effectiveness of China’s fiscal measures, U.S. economic resilience, and the strategic direction of the incoming Trump administration, which has historically emphasized energy independence.
With global supply likely to remain tight in the near term, traders are balancing optimism over demand recovery against concerns about slowing economic momentum. The coming months are expected to test the market’s ability to adapt to policy shifts and fluctuating fundamentals.
