Oil News: China’s Policy Shift Fuels Demand Outlook as Traders Await EIA Data

Prices Rally on Chinese Stimulus Hopes and EIA Inventory Data

Light crude oil futures advanced on Wednesday, testing the pivotal $69.11 level, signaling potential for further gains. However, traders remain cautious ahead of U.S. inventory data and technical resistance at the 50-day moving average of $70.07, which could trigger an acceleration to the 200-day average at $72.94.

At 11:08 GMT, Light Crude Oil futures are trading $69.26, up $0.67 or 0.98%.

China’s Policy Shift Fuels Demand Optimism

Oil prices rose following China’s announcement of its first monetary policy easing in 14 years, aimed at stimulating economic growth. Beijing signaled it would adopt an “appropriately loose” stance in 2025, bolstering expectations of higher crude demand. November data showed a 14% annual increase in Chinese crude imports, breaking a seven-month trend of stagnation.

Market strategist Yeap Jun Rong noted that stronger policy signals have reignited hopes for meaningful stimulus measures, although some traders remain cautious, awaiting more definitive actions. Analysts warn that these policy shifts may only mitigate downside risks without fully offsetting other economic headwinds, including potential U.S. trade policies under the incoming administration.

U.S. Inventory Data and Production Trends

In the U.S., crude oil and fuel stocks rose last week, with the American Petroleum Institute reporting a 499,000-barrel build in crude inventories and significant increases in gasoline and distillate stocks. Official Energy Information Administration (EIA) data, expected later today, could influence market sentiment. Analysts forecast a 900,000-barrel decline in crude stocks, alongside a 1.7 million-barrel rise in gasoline inventories.

Meanwhile, the EIA’s December Short-Term Energy Outlook revealed a projected 20% drop in U.S. net crude imports in 2025, driven by higher domestic production and declining refinery runs. U.S. oil output is expected to rise to 13.52 million barrels per day (bpd) in 2025, while refinery throughput is forecast to decrease by 200,000 bpd due to capacity reductions.

Global Supply and Demand Adjustments

The EIA also revised its global demand and supply forecasts for 2025, reducing demand expectations to 104.3 million bpd and output projections to 104.2 million bpd. Spot Brent crude prices are now expected to average $73.58 per barrel in 2025, with WTI prices averaging $69.12 per barrel, reflecting a bearish revision.

Market Forecast

Crude oil prices are poised for a potential rally if light crude sustains a break above $70.07, targeting $72.94 in the near term. However, downside risks remain, particularly if today’s EIA data reveals higher-than-expected inventory builds or if the market fails to capitalize on Chinese demand optimism. For now, the outlook is cautiously bullish but dependent on key technical and fundamental factors.

More Information in our Economic Calendar.