Cautious Optimism Informs Oil Trading In First Session of 2025, Prices Up

Meanwhile, a swelling of U.S. stocks will likely soon be corrected, says Flynn: File Image/Pixabay

The first oil trading day of 2025 ended not with a bang, but nonetheless with a satisfying sense of cautious optimism as investors fresh from the holidays chose to be hopeful for China's economy and took a swelling of U.S. gasoline inventories in stride.

Brent settled up $1.29 at $75.93 per barrel, while West Texas Intermediate settled up $1.41 at $73.13 per barrel.

The gains were mainly attributed to a Caixin/S&P Global survey published Thursday showing that China's factory activity grew in December, albeit at a slower than expected pace, which in turn suggested that the country's economy may be receptive to further government stimulus, as planned by Beijing.

Antonio Di Giacomo, senior market analyst at XS.com, said in a note, "President Xi Jinping's statements promising more proactive policies to stimulate growth have raised expectations of increased energy demand.

"While recent data indicates marginal growth in the country's manufacturing activity, sectors such as services and construction have started showing signs of recovery, suggesting a gradual strengthening of China's economy,"

Bloomberg said with regards to Thursday's trading, "Oil has broken out of a narrow range it's been trading in since the mid-October, with a move by both benchmarks above their 100-day moving average leading to algorithmic buying."

Presumably, traders weren't overly spooked on Thursday by the U.S. Energy Information Administration reporting a 7.7 million barrel gain for gasoline stocks and a 6.4 million barrel growth of distillates, because these figures were buffered by a 1.2 million drop in crude inventories, marking the six consecutive weekly decline for that commodity.

Phil Flynn, senior market analyst at Price Futures Group Inc., said that a forecast cold blast across Texas next week along with generally colder weather across the U.S. could boost energy demand.

Flynn added that the U.S. stock builds were more than likely due to year-end tax positioning and will probably be corrected next week.