Investing.com — Oil prices rose slightly in Asian trade on Monday, as traders received positive signals from the US government to avoid a lockdown over the weekend, while weak inflation data from the country also helped.
The focus remains largely on demand through 2025, with China, the largest oil importer, signaling plans for more stimulus measures next year. On the supply front, the prospect of further US sanctions on Iran and Russia also represents a tighter supply outlook.
February futures rose 0.4% to $73.20 per barrel, while they rose 0.4% to $69.75 per barrel by 20:19 ET (01:19 GMT).
Positive US signals support oil prices
Oil traders were relieved after the US government averted a potential shutdown over the weekend, as President Joe Biden approved a stop-gap spending bill that approves government funding through March.
Fears of a US lockdown grew last week after President-elect Donald Trump criticized a bipartisan funding bill over its provisions to Democratic lawmakers and proposed a revised bill that also seeks to increase the debt limit. The amendment was rejected by lawmakers.
Markets feared that the US shutdown, especially during the holiday season, would disrupt travel and harm fuel demand.
Oil markets were also supported by a weaker dollar, with the US currency retreating from its highest levels in more than a year after data – the Fed's preferred measure of inflation – came in lower than expected for November, indicating some easing in price pressures.
But the reading came just days after the Federal Reserve announced a slowdown in the pace of interest rate cuts in 2025 – a scenario that could impact economic growth and hamper oil demand.
Chinese demand and supply shortages set the theme for 2025
Concerns about slowing demand and increasing supplies have sent oil prices down more than 5% so far in 2024.
Going into 2025, the focus will squarely be on whether further stimulus measures in China can help stimulate economic growth.
The focus will also be on US policy under President-elect Donald Trump, who has taken a more protectionist stance towards China and Iran.
The United States could impose further sanctions on the Iranian oil industry, further restricting global supplies.
Recent reports said that the United States is also considering imposing further sanctions on Russian oil exports.
