Oil prices are rising as factories in China ramp up their operations.
According to Ukrinform, this was reported by Reuters.
Brent crude prices climbed by 60 cents, or 0.8%, to $74.59 per barrel. American oil West Texas Intermediate increased by 62 cents, or 0.9%, to $71.61 per barrel. Over the year, Brent has decreased by 3.2%, while WTI has fallen by 0.1%.
Manufacturing activity in China grew for the third consecutive month in December, but at a slower pace, as indicated by an official factory survey released on Tuesday, suggesting that aggressive stimulus measures are helping to support the world's second-largest economy.
The Chinese authorities also agreed to issue a record 3 trillion yuan ($411 billion) in special treasury bonds in 2025 to revive economic growth.
A weaker demand forecast for China prompted the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) to lower their oil demand expectations for 2025.
Earlier this month, OPEC and its allies postponed their plan to increase production until April 2025 amid falling prices. The IEA expects global oil supply to exceed demand in 2025, even if OPEC+ cuts remain in place, as production growth in the U.S. and other external producers outpaces weak demand.
While the weak long-term demand forecast has affected prices, they may find short-term support from a reduction in U.S. crude oil inventories, which are expected to have fallen by about 3 million barrels last week.
Both Brent and WTI received support from a larger-than-expected reduction in U.S. crude oil inventories for the week ending December 20, as refineries ramped up activity and the holiday season boosted fuel demand.
Investor attention next year will be focused on the Federal Reserve's interest rate policy after the central bank forecasted only two rate cuts earlier this month, compared to four in September, due to persistently high inflation.
Changes in expectations regarding U.S. rates and the widening interest rate differential between the United States and other economies have strengthened the dollar and impacted other currencies.
The strengthening dollar makes oil purchases more expensive for consumers outside the United States, affecting demand.
Markets are also preparing for the policies of newly elected President Donald Trump regarding deregulation, tax cuts, tariff increases, and stricter immigration, which are expected to contribute to growth and inflation – ultimately benefiting the dollar.
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