Oil prices gained modest ground as 2025 began, reflecting cautious optimism among investors analysing China’s economic outlook and fuel demand. A commitment from Chinese President Xi Jinping to implement growth-focused policies has prompted speculation about potential shifts in global oil dynamics.
Brent crude futures and U.S. West Texas Intermediate crude both advanced slightly in early trading, building on gains from the previous session. This upward momentum follows encouraging signals from China’s factory and manufacturing data, which indicate gradual recovery despite lingering concerns about the trade environment and global geopolitical risks. The Caixin/S&P Global survey highlighted growth in factory activity, though at a slower rate than anticipated, aligning with official figures that suggest selective policy measures are beginning to yield results.
Market analysts are keeping a close watch on U.S. policy shifts under President-elect Donald Trump, whose economic strategies could influence crude oil demand. These dynamics are layered with uncertainties around tariffs and the broader global trade outlook. Traders and investors alike are awaiting pivotal U.S. economic data, including the ISM manufacturing index, as well as delayed weekly inventory reports from the Energy Information Administration. Early expectations suggest a decline in crude and distillate stockpiles, coupled with a rise in gasoline inventories.
The U.S. energy sector has been buoyed by surging demand and record-breaking crude output. October marked a post-pandemic peak in U.S. oil demand, reaching 21.01 million barrels per day, alongside production levels climbing to 13.46 million barrels per day. While OPEC+ continues its efforts to stabilise the market, a Reuters poll predicts that oil prices will hover around $70 per barrel in 2025, constrained by weak demand from China and increasing global supplies.
In Europe, Russia’s cessation of gas exports through Ukraine underscores shifting energy dynamics. However, alternative arrangements have ensured minimal disruption for EU consumers. Hungary, for instance, maintains its access to Russian gas via the TurkStream pipeline under the Black Sea.
The evolving interplay of economic policies, geopolitical factors, and market fundamentals will shape oil’s trajectory in the coming months. The outlook for sustained growth and stability hinges on the balance of supply, demand, and global trade relations.
A measured rise in oil prices reflects investor focus on China’s growth policies and shifting global dynamics. Brent and WTI crude gained modestly as factory data pointed to recovery, and U.S. production hit record highs. While geopolitical and trade uncertainties persist, the market anticipates restrained price movements near $70 per barrel in 2025.
Union Jack Oil plc (LON:UJO) is an oil and gas company with a focus on onshore production, development, exploration and investment opportunities within the United Kingdom and the United States of America hydrocarbon sector.
