DTN Oil Update
Oil Futures Settled Higher on 2025 Demand Outlook
HOUSTON (DTN) -- New York Mercantile Exchange West Texas Intermediate futures and the Brent contract on the Intercontinental Exchange settled higher on Monday on the back of limited supplies expectations and despite thin trading activity ahead of the New Year's holiday.
Oil futures prices rose even though the U.S. dollar strengthened 0.10% to 107.885 against a basket of foreign currencies including the British pound, the Canadian dollar and the Japanese yen.
The NYMEX WTI futures contract for February delivery increased $0.60 to $71.20 bbl, while the front-month ICE Brent futures contract rose $0.22 to $74.39 bbl. January RBOB futures rose $0.0176 to $1.9758 gallon and ULSD futures for January delivery rose $0.0603 to $2.3051 gallon.
The upward trend was supported by Energy Information Administration data showing a decline in U.S. crude inventory stocks for the fifth consecutive week. Crude stocks dropped by 4.2 million bbl to 416.8 million bbl in the week ended Dec. 20, according to the data released last Friday, Dec. 27.
Crude production remained steady at 13.6 million bbl in the same reference week, while refinery run rates rose to 92.5% from 91.8% reported the previous week, the EIA data showed.
But looking ahead to 2025, the oil futures market will continue focusing on a reactivation of the demand from China, the largest importer of crude in the world. The ambitious stimulus plan that Chinese authorities have pledged to implement next year will be the key to trigger its domestic demand that remained dormant this year and put downward pressure on oil prices globally.
Geopolitical events in the Middle East and the Russia-Ukraine war will also be key factors impacting the global demand for crude and oil products next year.
Monday, and in response to the escalation of the conflict seen in recent weeks, U.S. President Joe Biden announced nearly $2.5 billion in security assistance for Ukraine, "as the Ukrainian people continue to defend their independence and freedom from Russia," he said in a statement.
Sanctions on Russian and Iranian crude, and trade tariffs that the upcoming Trump administration is expected to impose on China, Mexico and Canada will be also monitored closely by market participants next year.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
