Investing.com – Oil prices rose in Asian trade on Tuesday amid weak trading on the final day of the year, as investors remained cautious as they assessed the outlook for the coming year.
At 19:43 ET (00:43 GMT), they were steady at $74.13 a barrel, and for February expiration they were up 0.3% at $70.73 a barrel.
Trading volume was weak ahead of the start of the new year as many institutional investors and traders took time off during the holiday season. In addition, year-end profit taking and portfolio rebalancing reduce trading activity.
China manufacturing data, US ISM survey on tap
China is due to release its latest on Tuesday, which would provide insight into the strength of the world’s second-largest economy.
The outlook for oil demand hinges on hopes that China, the world’s biggest oil importer, can revive its economy, particularly as there are concerns about a potential oversupply due to an expected increase in production from non-OPEC countries.
Markets await more clarity on Beijing’s plans for stimulus measures next year. Recent reports suggest that the country will increase fiscal spending to support economic growth.
In addition, the US releases data for December on Friday, and traders will be looking for clues about the strength of economic activity in the world’s biggest energy consumer.
Oil tracks annual losses on demand concerns
Both contracts were on track for annual declines, with WTI set to fall nearly 1% and on track to lose nearly 4%, as traders remain cautious about China’s economic outlook and the possibility of oversupply in the coming months.
The International Energy Agency (IEA) recently raised its demand forecast for next year, but maintained its projection that the oil market will remain well-supplied.
The latest data from the Energy Information Administration (EIA) showed that US oil production remains near record levels, and the incoming Donald Trump administration is likely to agree to policies that would focus on increasing domestic production of fossil fuels.
Market participants are also wary of broader economic concerns, including weaker-than-expected demand growth in China, traditionally a key driver of global oil consumption. Chinese oil demand has eased, further underscoring the expected oversupply scenario.
Traders are concerned about the outlook for 2025 as rising supply and a weak recovery in demand weigh on balance sheets.
