WTI crude oil price rises to $73 as policy support signals fuel optimism
WTI crude oil rises to $73 amid economic recovery optimism and policy support
West Texas Intermediate (WTI) crude oil extended its winning streak, reaching $73 per barrel on Friday, driven by renewed optimism for global economic recovery. This price surge marks a two-and-a-half-month high, supported by expectations of increased government policy measures worldwide to revive growth.
A key factor was China’s National Development and Reform Commission's (NDRC) announcement to boost funding through ultra-long treasury bonds aimed at “two new” infrastructure programs, signaling steady fuel demand growth.
However, weak factory output data across Asia, Europe, and the U.S. has tempered investor enthusiasm, as economic uncertainties persist under President-elect Donald Trump’s proposed trade policies. Analysts from Capital Economics noted that December's purchasing managers’ indexes (PMIs) indicated sluggish manufacturing growth, adding to concerns of continued economic fragility.
WTI crude oil (Nov 2024 - Jan 2024) Source: TradingView.
China’s policy commitments and crude stock insights
The People's Bank of China (PBoC) hinted at a potential interest rate cut in 2025, reinforcing market hopes for increased liquidity. In his New Year’s address, President Xi Jinping emphasized proactive measures to stabilize the world’s largest oil-importing economy.
The Energy Information Administration (EIA) reported a 1.178 million-barrel decline in U.S. crude oil stocks for the week ending December 27. Though smaller than the anticipated 2.75 million-barrel drop, this marks the sixth consecutive weekly decline. Additionally, Cushing, Oklahoma, saw a 0.142 million-barrel reduction in inventories, reflecting continued supply pressure amid global demand fluctuations.
While China's stimulus measures buoy market sentiment, concerns over geopolitical risks and tariff-related disruptions could cap gains. Analysts remain watchful of economic indicators from key oil-consuming nations, as mixed PMI data suggests manufacturing growth may remain subdued. The balance between policy-driven optimism and external trade risks will likely determine crude oil's trajectory in early 2025.
In our previous coverage, we discussed how WTI’s rise to $71.65 was supported by China’s PMI expansion and U.S. crude drawdowns. These factors continue to shape the energy market as traders monitor key developments.
