Oil News: OPEC+ Cuts and Optimistic China Demand Boost 2025 Oil Projections
Light crude futures rebound as China’s factory growth sparks oil demand optimism, while traders eye OPEC+ cuts and geopolitical risks.
Futures Edge Higher on Optimistic China Data and Geopolitical Tensions
Light crude oil futures rose on Monday, attempting to recover from a four-day losing streak. The market faced resistance at $69.11 and the 50-day moving average of $70.09. While the near-term trend remains bearish, traders are monitoring $67.87 as a potential trigger for an accelerated decline to a critical support zone at $65.65-$63.36.
At 11:43 GMT, Light Crude Oil futures are trading $68.71, up $0.71 or +1.04%.
China’s Economic Recovery Fuels Demand Optimism
China, the world’s second-largest oil consumer, reported its fastest factory activity growth in five months, boosting market sentiment. Analysts at UBS noted that China’s stimulus measures are beginning to positively impact economic activity, suggesting stronger oil demand in the coming months. The upbeat data comes as traders continue to assess the broader implications of geopolitical tensions and U.S. policy developments.
Middle East Tensions and OPEC+ Decisions in Focus
Geopolitical risks in the Middle East added to price support, with Israeli airstrikes on Lebanon and Syria continuing despite a ceasefire agreement. The uncertainty surrounding the situation raises concerns about potential supply disruptions in the region.
Meanwhile, the upcoming OPEC+ meeting on December 5 is expected to be pivotal for oil prices. The group may delay a planned production hike for early 2025 to stabilize the market. Last week, crude benchmarks fell over 3% amid eased supply concerns and projections of a surplus in 2025.
Shift in Asian Crude Oil Imports
November data showed a shift in Asia’s crude oil imports, with Saudi Arabia reclaiming market share from Russia. Saudi crude exports to Asia increased by 550,000 bpd to 5.83 million bpd, supported by competitive pricing and stronger refining margins in Asia. Conversely, Russia’s crude shipments fell to 3.51 million bpd, the lowest since January, reflecting higher transportation costs and sanctions on Russian oil exports.
China and India, the primary buyers of Russian oil, reduced their imports in November, while increasing purchases from Middle Eastern suppliers such as Saudi Arabia, Iraq, and Oman. The narrowing premium of Brent over Dubai crude could further support demand for Middle Eastern oil, particularly as Asian crude imports are projected to decline in 2024.
Market Forecast: Bearish Short-Term Outlook
While Monday’s gains are encouraging, the market faces significant resistance near $70. A sustained break below $67.87 could lead to further declines toward the $65.65-$63.36 support zone. OPEC+ policy decisions and developments in the Middle East will be critical factors influencing oil prices this week. Traders should prepare for potential bearish pressure unless supply or demand fundamentals shift meaningfully.
More Information in our Economic Calendar.