Oil prices rise as China’s manufacturing activity expands for third month

Oil prices climbed as 2024 drew to a close, bolstered by three months of steady growth in China’s manufacturing sector — a critical indicator of recovery in the world’s largest crude importer, according to Bloomberg.

Brent crude rose for the third consecutive session, nearing $75 per barrel, while West Texas Intermediate (WTI) crude held steady above $71. These gains were driven by signs of an economic rebound in China, spurred by recent stimulus efforts. However, the potential for a trade war under the incoming Donald Trump administration casts a shadow over this momentum.

Since mid-October, crude prices have remained within a tight trading range. Brent is set to end the year with a slight annual loss, while WTI is expected to close with minimal changes. In the penultimate week of 2024, bullish positions on WTI reached their highest level in four months, signaling cautious optimism among investors ahead of what could be a turbulent year.

2025: A year of contradictions for the oil market

The outlook for oil in 2025 is fraught with uncertainty, shaped by opposing forces. While sluggish demand in China and concerns over a global supply glut may suppress prices, geopolitical tensions — such as renewed conflict in the Middle East or Ukraine — could drive temporary spikes, Bloomberg reports.

President-elect Donald Trump has already hinted at imposing tariffs on major oil-producing nations, including China, Canada, and Mexico, further unsettling markets. Meanwhile, his pick for National Security Advisor, Mike Waltz, has pledged to impose "maximum pressure" on Iran, adding another layer of potential volatility.

OPEC and its allies face the challenge of navigating a delicate supply-demand balance. Concerns over a potential surplus have complicated efforts to restore halted production. While some analysts predict prolonged weakness in crude prices over the next two years, geopolitical shocks could upend these forecasts.

As 2025 begins, the oil market finds itself at a crossroads, grappling with economic recovery, fluctuating supply dynamics, and persistent geopolitical uncertainties.