Latest Report on U.S. Crude Oil Stock Levels in 2024 Contributes to a 1% Increase in Oil Prices
With the oil market looking towards the new year, there was a slight rise in futures prices in the United States due to a minor increase in crude inventories at the end of 2024. This was highlighted in a report released by the U.S. Energy Information Administration on Friday.
According to the report, the country's crude oil inventories decreased by approximately 4.2 million barrels, bringing the total to 416.8 million barrels. This increase in demand was largely attributed to refineries boosting their production capacity to meet the higher demand for fuels during the festive season.
The decrease in inventories was significantly higher than the 900,000 barrel decline recorded in the previous week. It also surpassed the American Petroleum Institute's estimated drawdown of 3.2 million barrels for the same period.
Following the release of this data, the Brent front-month crude futures contract closed at $74.17 per barrel, up by $0.91 or 1.2%. The West Texas Intermediate futures contract closed at $70.60 per barrel, rising by $0.98 or 1.4%.
This upward trend placed Brent, often considered the global benchmark, 1.9% higher over the past five days. However, it still represented a decrease of over 3% for the year and over 7% over the past 12 months.
A portion of this price rise may also be attributed to optimism about China's economic performance in 2025. This optimism stemmed from the World Bank's overnight upgrade of China's economic growth forecast. The World Bank now predicts a 4.9% growth rate for 2024 (an increase from its previous forecast of 4.8% in June) and a 4.5% growth rate for 2025.
Furthermore, Reuters reported this week that China had agreed to issue a record $411 billion in special treasury bonds in 2025. Although the exact figure will not be revealed until March 2025, Beijing's goal for 2025 is a 5% growth rate.
However, the World Bank cautioned that while these measures may provide some support, factors such as subdued consumer and business confidence, along with problems in the property sector, will continue to hinder growth in 2025.
Additionally, there are doubts in the market about whether an improved economic outlook for China in 2025 will lead to increased demand from the world's largest oil importer. This uncertainty stems from recent concerns about China's demand, which were intensified by Sinopec's assessment that China's crude imports could peak as early as next year.
Furthermore, Sinopec predicted that China's oil consumption might peak by 2027, with a possible decline in demand for diesel and gasoline. As a result, Beijing is currently importing 300,000 barrels per day less by the end of Q4 2024 compared to Q4 2023.
- The 2025 oil price forecast has been influenced by optimism about China's economic performance, as the World Bank recently upgraded China's growth rate prediction for 2025 to 4.5%.
- Investors are closely watching oil futures, particularly Brent futures, due to the potential impact of China's oil demand on global crude oil markets.
- According to some analysts, the U.S. oil demand could see a significant increase in 2025, leading to a potential decrease in crude oil inventories and a potential rise in WTI futures.
- The 2025 oil demand in China, however, remains uncertain, as concerns about China's crude oil imports and consumption persist.
- Despite the potential rise in oil prices due to anticipated demand, crude oil inventories still need to be closely monitored to understand the overall direction of the oil market in 2025.
