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Commodities

Oil prices rise on China optimism as investors return after holiday

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By Anna Hirtenstein

LONDON (Reuters) -Oil prices rose on Thursday as investors returned for the first trading day of the new year with an optimistic eye on China’s economy and fuel demand after a pledge by President Xi Jinping to promote growth.

futures rose $1.04, or 1.39%, to $75.68 a barrel by 1205 GMT after gaining 65 cents on Tuesday, the last trading day of 2024. U.S. West Texas Intermediate crude was up $1.02, or 1.42%, at $72.74.

Xi’s New Year address on Tuesday said that China would implement more proactive policies to promote growth in 2025.

China’s factory activity grew in December, a Caixin/S&P Global survey showed on Thursday, but at a slower pace than expected in the face of concerns over how tariffs proposed by U.S. President-elect Donald Trump will affect the trade outlook.

The data echoed an official survey released on Tuesday, which showed that China’s manufacturing activity barely grew in December. However, services and construction fared better, with the data suggesting that policy stimulus is trickling into some sectors.

Weaker Chinese data is seen by some analysts as positive for oil prices because it could prompt Beijing to accelerate its stimulus programme. 

Traders are returning to their desks and probably weighing higher geopolitical risks and Trump running the U.S. economy red hot against the expected impact of tariffs, said IG market analyst Tony Sycamore.

“Tomorrow’s US ISM manufacturing release will be key to crude oil’s next move,” Sycamore said.

Sycamore said WTI’s weekly chart is winding itself into a tighter range, suggesting that a big move is coming.

“Rather than trying to predict in which way the break will occur, we would be inclined to wait for the break and then go with it,” he added.

Investors are also awaiting weekly U.S. oil stocks data from the Energy Information Administration, which was postponed to Thursday because of the New Year holiday.

oil and distillate stockpiles are expected to have fallen last week while gasoline inventories are expected to have risen, an extended Reuters poll showed on Tuesday. [EIA/S]

October’s oil demand reached the highest level since the COVID-19 pandemic at 21.01 million barrels per day (bpd), up about 700,000 bpd from September, EIA data showed on Tuesday.

Crude output from the world’s top producer rose to a record 13.46 million bpd in October, up 260,000 bpd from September, the report showed.

© Reuters. FILE PHOTO: Oil tankers the Yamilah III and the Bow Gemini are seen anchored in New York Harbor in New York City, U.S., May 24, 2022. REUTERS/Brendan McDermid/File Photo

Oil prices are likely to be constrained near $70 a barrel in 2025, down for a third year after a 3% decline in 2024, with weak Chinese demand and rising global supplies offsetting OPEC+ efforts to shore up the market, a Reuters poll showed.

In Europe, Russia halted gas pipeline exports through Ukraine on New Year’s Day after the transit agreement expired on Dec. 31. The European Union has arranged alternative supply ahead of the widely expected stoppage while Hungary will keep receiving Russian gas via the TurkStream pipeline under the Black Sea.

Commodities

Oil prices rise; set for second straight weekly gain

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Investing.com–Oil prices rose on Friday, heading for a second consecutive weekly gain as optimism around China’s economic growth lifted market sentiment.

The were last up 0.8% to $76.6 a barrel, and  expiring in February was up 1.1% to $73.3 a barrel.

Oil had gained sharply in the previous session after data showed growth in Chinese factory activity.

Both contracts were on course for second consecutive weekly gains, with WTI 1.3% and 0.9% higher. 

Chinese stimulus hopes support oil prices

China’s  grew in December, a Caixin/S&P Global survey showed on Thursday, but at a slower pace than expected.

An official survey released on Tuesday also showed that China’s manufacturing activity barely grew in December. However, services and construction fared better, with the data suggesting that policy stimulus is trickling into some sectors.

Beijing has signaled looser monetary policy for 2025 and has doled out a raft of major stimulus measures since late September, in order to boost its sluggish economy.

China’s central bank has indicated that it plans to lower interest rates from the current 1.5% “at an appropriate time” in 2025, the Financial Times reported on Friday.

Traders assess EIA data amid oversupply concerns

{{8849|US crude oil inventories declined, while gasoline and distillate stocks saw significant increases as demand softened during the week ending December 27, the reported on Thursday.

The EIA stated that dropped by 1.2 million barrels last week, falling short of analysts’ expectations for a 2.8 million-barrel decrease.

Latest EIA surveys have shown that U.S. oil production remains near record levels, and the incoming Donald Trump administration is likely to agree to policies that would focus on ramping up domestic fossil fuel production.

This comes amid worries about potential oversupply driven by anticipated production increases from non-OPEC nations, further underscoring an oversupply scenario.

The International Energy Agency recently said that the oil market will remain adequately supplied, despite a rise in demand forecast for 2025.

(Peter Nurse contributed to this article.)

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Commodities

Biden to ban new oil drilling over vast areas of US Atlantic, Pacific waters, Bloomberg News reports

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(Reuters) – President Joe Biden is set to ban new offshore oil and gas development across 625 million acres (250 million hectares) of U.S. coastal territory, Bloomberg News reported on Friday.

The ban, to be announced on Monday, rules out the sale of drilling rights in stretches of the Atlantic and Pacific oceans and the eastern Gulf of Mexico, said the report, citing unidentified people familiar with the matter.

Biden is leaving the possibility open for new oil and leasing in the central and western areas of the Gulf of Mexico, which account for around 14% of the nation’s production of these fuels, the report said.

The White House did not immediately respond to a Reuters request for comment outside of business hours.

The ban would solidify Biden’s legacy on addressing climate change and his goal to decarbonize the U.S. economy by 2050.

The New York Times (NYSE:) reported that a section of the law Biden’s decision relies on, the Outer Continental Shelf Lands Act, gives a president wide leeway to bar drilling and does not include language that would allow President-elect Donald Trump or other future presidents to revoke the ban.

© Reuters. FILE PHOTO: U.S. President Joe Biden delivers remarks on securing 235 judicial confirmations, at the White House in Washington, U.S., January 2, 2025. REUTERS/Kevin Lamarque/File Photo

Biden, Trump and Trump’s predecessor, Barack Obama, all used the law to ban sales of offshore drilling rights in some coastal areas.

Trump tried in 2017 to reverse Arctic and Atlantic Ocean withdrawals Obama had made at the end of his presidency, but a federal judge ruled in 2019 that the law does not give presidents the legal authority to overturn prior bans.

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Russia clears thousands of tons of contaminated sand after Black Sea oil spill

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(Reuters) – Russian rescue workers have cleared more than 86,000 metric tons of contaminated sand and earth on either side of the Kerch Strait following an oil spill in the Black Sea last month, the emergencies ministry said on Saturday.

The oil leaked from two ageing tankers that were hit by a storm on Dec. 15. One sank and the other ran aground.

More than 10,000 people have been working to shovel up viscous, foul-smelling fuel oil from sandy beaches in and around Anapa, a popular summer resort. Environmental groups have reported deaths of dolphins, porpoises and sea birds.

The emergencies ministry said on the Telegram messaging app that oil-tainted soil had been collected in the broader Kuban region in Russia and in Crimea, which Moscow annexed from Kyiv in 2014.

The ministry published video footage showing dozens of workers in protective suits loading bags of dirt onto diggers and others skimming dirt off the sand with shovels.

Russia’s transport ministry said this week experts had established that about 2,400 metric tons of oil products had spilled into the sea, a smaller spill than initially feared.

© Reuters. FILE PHOTO: A volunteer works to clear spilled oil on the coastline following an incident involving two tankers damaged in a storm in the Kerch Strait, in the settlement of Blagoveshchenskaya near the Black Sea resort of Anapa in the Krasnodar region, Russia December 21, 2024. REUTERS/Sergey Pivovarov/File Photo

When the disaster struck, state media reported that the stricken tankers, both more than 50-years old, were carrying some 9,200 metric tons (62,000 barrels) of oil products in total.

The spill involved heavy M100-grade fuel oil that solidifies at a temperature of 25 degrees Celsius (77 degrees Fahrenheit) and, unlike other oil products, does not float to the surface but sinks to the bottom or remains suspended in the water column.

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