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Oil prices rise as US inventories draw, markets weigh outlook for 2025 By Investing.com

Investing.com– Oil prices were higher in Asian trade on Thursday after data showed U.S. crude inventories fell last week, while traders remained cautious as they considered the outlook for the new year.

At 20:39 ET (01:39 GMT), it was up 0.7% at $75.13 a barrel, and February expiry jumped 0.7% to $71.75 a barrel.

Oil posted a moderate annual loss in 2024, and traders entered 2025 with a cautious attitude as they prepare for this year’s oversupplied market.

API reports decline in US oil inventories

reported on Tuesday that US oil inventories fell by 1.4 million barrels last week.

The decline in US oil inventories indicates an increase in demand for crude oil, which can be good for crude oil prices. When supplies run low, traders could buy into the oil market, which can push prices higher.

The US (EIA), the statistics arm of the US Department of Energy, will release its weekly data later on Thursday.

Traders will wait to see if the official inventory report confirms the decline. These official figures provide insight into the dynamics of supply and demand in the US crude oil market, influencing pricing and economic decisions.

The oil market is preparing for an oversupply in 2025

Despite falling inventories, the latest EIA data 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.

The International Energy Agency (IEA) recently said that the oil market will remain adequately supplied, despite the demand growth forecast for 2025.

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.

Chinese President Xi Jinping said in his New Year’s address on Tuesday that the world’s biggest oil importer will implement more proactive policies to promote growth in 2025.

Traders remain cautious about the outlook as rising supply and a weak recovery in demand weigh on balance sheets.





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