The oil prices rose on Friday, as the optimism about a recovery in demand from China helped to boost sentiment.
Prices were also lifted by a decline in crude oil stocks in the US on Friday.
In a recent report, Arslan Ali said that “geopolitical tensions added to the uncertainty and kept natural gas markets volatile.”
A stronger US dollar, up 7% in the last quarter, has limited further gains and made oil more expensive for buyers who do not hold dollars.
The price of West Texas Intermediate Crude Oil on the New York Mercantile Exchange at the time this article was written was $69.96 per barrel. This is a 0.5% increase.
Brent crude oil at the Intercontinental Exchange closed at $73.11 a barrel, an increase of 0.4% over the previous close.
The crude benchmarks are on track for modest gains this week.
China optimism
The World Bank’s revised forecast for China’s economic growth for 2024-2025 was accompanied by optimism about the recovering oil demand in China.
The bank said, however, that the subdued confidence of households and businesses will continue to impact economic activity in 2019.
Reuters reported this week that China is likely to issue special treasury bond, amounting to $3 trillion yuan, or $411 billion, in 2025.
China’s economy has struggled over the last year due to a property crises and a weakening of industrial activity.
Oil imports declined steadily throughout the year. This indicates a plateau in demand growth for crude oil by the world’s largest importer.
Experts have also predicted that China’s demand for oil will peak in the next few years.
Emma Li, an analyst at Vortexa, told ICD in October that the peak gasoline demand for China could be as soon as next year.
Investors will continue monitoring the economic climate in China over the next few weeks to get further clues.
Inventories
According to the American Petroleum Institute (API), crude oil inventories declined in the US by 3.2 millions barrels during the past week.
Analysts predicted that inventories would decline by only 700,000 barrels during the week ending December 20.
Investors are now waiting for the official data to be released by the US Energy Information Administration on Friday.
Due to the Christmas holiday, the release of data has been delayed.
Oil bulls will be relieved to see the decline in inventories, as the US production has been steadily increasing this year.
The EIA predicts that oil production in the US will average 13,52 million barrels a day by next year, which is a record high.
International Energy Agency also stated that the growth of 2025 would be driven by oil supplies from countries other than the Organization of Petroleum Exporting Countries (OPEC) and its allies.
According to the Paris-based company, the US will be leading the supply growth next.
Technical Analysis
The trading volume on Friday, the last day of 2024, was low. The volume of trading is also expected to remain low for the final two days next week.
WTI prices held at around $70 per barrel after breaking above the $69.75 50-day exponential Moving Average.
Ali stated that a sustained move above $69.54 would push oil towards resistance levels at $70.50 or $71.37 and signal renewed bullish momentum.
Prices are supported at $68.77 a barrel and then $67.88.
Chart created by FXempire.
Brent crude oil is currently at $73.81 a barrel. The next resistance level is $74.54.
Ali Noted:
The key level for traders to determine the next trend is $73.
The post Oil to end in the last week of 2024, with modest gains on China Demand Hopes may be updated as new developments unfold.
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