Oil prices rise as Chinese stimulus boosts market optimism
Crude oil gains on Chinese stimulus and bullish technical indicators
Crude oil prices gained momentum during the Christmas holidays, fueled by China’s latest economic stimulus measures designed to increase consumer spending. The Chinese finance ministry announced funding for pensions, medical insurance, and consumer goods trade-ins, igniting expectations of higher oil demand.
Brent crude climbed to $73.80 per barrel, while West Texas Intermediate (WTI) reached $70.32, reflecting improved market sentiment.
Satoru Yoshida, an analyst at Rakuten Securities, highlighted the role of these measures in boosting market confidence. Additional optimism stems from expectations of increased fossil fuel production under incoming U.S. President Donald Trump, whose pro-oil policies are anticipated to influence market dynamics.
USOIL price movement (Nov 2024 - Dec 2024) Source: TradingView.
Technical indicators show potential for growth
WTI crude oil prices remain in a neutral trading zone on the daily chart but are showing signs of bullish potential. Prices are currently bound by triangular patterns, and a breakout above $72.20 is necessary to confirm a sustained rally. Positive signals include a rebound from the 50-day SMA and a rising RSI, suggesting strengthening momentum.
On the 4-hour chart, WTI prices have broken out of a triangle and undergone successful retests, generating short-term upward momentum. For continued growth, the price must exceed $72.50. These technical indicators, combined with positive market sentiment, indicate a cautiously optimistic outlook for oil prices in the near term.
Traders are closely monitoring U.S. crude oil inventory reports, which are expected to show a decline. The American Petroleum Institute reported a 3.2 million-barrel draw last week, while analysts anticipate further reductions of 1.9 million barrels. Declines in gasoline and distillates stocks add to tightening supply concerns.
As 2025 approaches, factors such as Chinese economic activity and U.S. energy policies under the Trump administration are expected to shape oil market trends.
In our previous discussion, we analyzed WTI crude oil's stabilization near $69.30, emphasizing global uncertainties and technical breakout patterns that remain relevant for future price dynamics.
