Oil prices rose sharply on Thursday, the first trading day of 2025, as optimism over China’s economic policies and fuel demand boosted sentiment. Brent crude settled at $75.93 per barrel, up $1.29 (+1.7%), while U.S. West Texas Intermediate (WTI) closed at $73.13 per barrel, gaining $1.41 (+2%). However, swelling U.S. gasoline and distillate inventories limited further price increases.
Chinese President Xi Jinping pledged to implement proactive policies to drive growth in 2025, sparking expectations of increased demand. Manufacturing activity in China showed mixed signals, with slower-than-expected factory growth but improvements in services and construction, hinting at the impact of policy stimulus.
In the U.S., gasoline stocks rose by 7.7 million barrels and distillate inventories by 6.4 million barrels last week, according to the Energy Information Administration. Crude stockpiles fell by only 1.2 million barrels, below the expected 2.8-million-barrel draw, due to weaker-than-anticipated demand.
Geopolitical risks, including potential impacts from U.S. President-elect Donald Trump’s proposed tariffs and Europe’s efforts to secure alternative gas supplies after Russia halted pipeline exports through Ukraine, added uncertainty to the market. Analysts predict oil prices may remain near $70 per barrel in 2025, constrained by weak Chinese demand and ample global supplies despite OPEC+ production adjustments.