HG MARKETS:

Oil prices rose on Thursday as investors returned to optimism about China’s economy and fuel demand on the first trading day of the new year following President Xi Jinping’s pledge to boost growth. North Sea Brent crude futures rose $1.04, or 1.39 percent, to $75.68 a barrel, after rising 65 cents on Tuesday, the last trading day of 2024. West Texas Intermediate crude oil rose $1.02, or 1.42 percent, to $72.74. In his New Year’s address on Tuesday, President Xi said China will pursue more aggressive policies to boost growth in 2025. China’s factory activity grew in December but at a slower-than-expected pace amid concerns about how tariffs proposed by U.S. President-elect Donald Trump will affect the business outlook, a survey by Caixin and S&P Global on Thursday showed.The data mirrored an official survey released on Tuesday that showed China’s manufacturing activity barely increased in December. But services and construction fared better as data suggested policy stimulus was gradually filtering through to some sectors.Some analysts believe the weak Chinese economic data could encourage the Chinese government to speed up its stimulus efforts, which would be positive for oil prices. Tony Sycamore, a market analyst at IG, said traders were likely returning to their desks and weighing the impact of growing geopolitical risks and the Trump administration’s expected tariffs on fast-growing U.S. economies.

Investors are also awaiting weekly data on U.S. oil inventories from the Energy Information Administration, which was delayed until Thursday because of the New Year’s holiday. Reuters stated on Tuesday that last week’s raw oil in the United States and distilled distance decreased, and fuel supply is expected to increase. In October, petroleum requests reached 2101 million barrels (BPD) per day after COVVI-19 pandemic, or about 700,000 barrels per day after September. Crude oil production from the world’s largest producer hit a record 13.46 million barrels per day in October, 260,000 bpd more than in September, the report showed. Oil prices are expected to be capped at around $70 a barrel in 2025, down for the third year after a 3% decline in 2024, as weak Chinese demand and rising global supply offset efforts by OPEC+ to shore up the market, according to a Reuters poll. In Europe, Russia stopped exporting gas pipeline via Ukraine on the New Year after the expiration of the public transportation agreement on December 31. Hungary will continue to receive Russian gas through the Turk Stream pipeline under the Black Sea, while the European Union arranges for alternative supplies in case of an expected closure.

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