Oil prices rose on Monday in thin year-end trading, driven by forecasts of colder weather across the U.S. and Europe, expected to boost diesel demand. Brent crude futures settled at $74.39 a barrel, up 22 cents (0.3%), while the more active March contract closed at $73.99, up 20 cents. U.S. West Texas Intermediate (WTI) crude gained 39 cents (0.6%) to settle at $70.99 a barrel, and U.S. ultra-low sulfur diesel futures surged 2.5% to $2.30 per gallon, the highest since November 5. Heating degree days, a measure of space heating demand, are projected to rise to 499 over the next two weeks, up from 399 last Friday, according to LSEG.
U.S. natural gas futures jumped 17%, reaching their highest level since January 2023, bolstered by colder weather forecasts and growing export demand. Declining U.S. crude stockpiles also supported prices, with inventories expected to have dropped by 3 million barrels last week, following a larger-than-expected drawdown during the week ending December 20. Both Brent and WTI gained 1.4% last week as refiners ramped up activity amid increased holiday fuel demand.
Market participants are watching for China’s PMI factory surveys and the U.S. ISM survey later this week to gauge economic conditions in top oil-consuming nations. Concerns remain over potential oversupply next year if China’s economy falters, despite reports of record 3 trillion yuan ($411 billion) in special treasury bonds planned for 2025 to boost growth. Additionally, speculation continues around President-elect Donald Trump’s potential reinstatement of sanctions on Iranian crude, which could reduce exports to under 500,000 barrels per day, removing over 1 million barrels from global supply.