Oil prices ticked up on Tuesday following China's third consecutive month of manufacturing expansion, but broader concerns over demand weighed on markets, leaving crude poised for a second year of annual losses. For 2024, Brent declined 3.2%, while WTI dipped slightly by 0.1%.
Despite the growth in China's factory activity, which was bolstered by ongoing stimulus efforts, a weaker long-term demand outlook persists. OPEC and the IEA trimmed 2025 demand forecasts, citing economic headwinds in China.
OPEC+ delayed production increases until April 2025 to counteract falling prices. Meanwhile, U.S. crude stockpiles fell sharply, providing near-term support.
Investor attention now turns to the Federal Reserve’s stance on interest rates, with projections for only two rate cuts in 2025. Lower rates could spur economic growth and boost oil demand, but a strengthening U.S. dollar may suppress global purchases by increasing oil costs for non-dollar buyers.
Geopolitical risks loom as President-elect Trump’s tariff threats against China and potential conflicts in the Middle East could disrupt the market. Analysts remain divided, with some forecasting price stability and others anticipating volatility driven by unforeseen geopolitical or economic events.