Investors Return from Vacation and Optimism in China's Economy Boosts Oil Prices

Forex - Investors returning from vacation and optimism about the Chinese economy boosted oil prices on the first trading day of 2025. The price of Brent crude oil on the ICE rose by 28 cents to $74.92 per barrel, while West Texas Intermediate on NYMEX also increased by 28 cents to $72.

In his New Year address, Chinese President Xi stated that the country would implement more proactive policies to support growth in 2025. The official manufacturing PMI released on Tuesday and today's Caixin manufacturing PMI both indicated that manufacturing sector activity in China continued to grow in December, driving oil prices upward.

IG market analyst Tony Sycamore noted that traders have returned to their desks and are likely weighing higher geopolitical risks along with the impact of Trump’s tariffs on the U.S. economy. He emphasized that the upcoming U.S. ISM manufacturing data will be key for the next movement in crude oil following today’s Caixin PMI figures.

Sycamore pointed out that the WTI weekly chart has entered a tighter range, indicating that a significant move is approaching. "Instead of trying to predict how the breakout will occur, we will tend to wait for the breakout and then trade it," he added.

Investors are also awaiting the weekly U.S. oil stock data from the Energy Information Administration, which was postponed to today due to the New Year holiday.