West Texas Intermediate (WTI) crude oil prices continue to gain momentum following China’s latest manufacturing data, which revealed some expansion in the sector for December. China’s official Manufacturing Purchasing Managers’ Index (PMI) edged down to 50.1 from 50.3 the previous month, indicating a slight slowdown but still representing growth. Analysts had expected this figure to remain stable at 50.3. This information suggests that recent stimulus efforts are beginning to take effect in supporting the economy of the largest importer of crude oil.
During the Asian trading session on Tuesday, WTI climbed to around $71.40 per barrel, marking the third consecutive day of price increases. The recent data signals that factory production in China increased for the third month in a row, although the marginal decline in the PMI could influence trader sentiment. Additionally, the Chinese government is poised to issue a record 3 trillion yuan, approximately $411 billion, in special treasury bonds in 2025, aimed at boosting economic growth.
Short-term support for oil prices may also arise from a forecast reduction in U.S. crude inventories, which are anticipated to have fallen by around 3 million barrels last week. This potential decrease could create upward pressure on prices. However, there remain concerns regarding long-term demand, which are likely to keep oil prices under pressure. Market participants are closely monitoring upcoming U.S. factory survey results for indications of future demand trends.
As the market enters its final weeks of the year, oil prices are expected to reflect a modest annual decrease of about 0.5%. After months of operating within a narrow trading range, concerns about oversupply, geopolitical tensions, and potential changes from the incoming administration are creating a cautious sentiment in the oil market, suggesting volatility ahead.
