Investing.com — Oil prices rose in Asian trading on Thursday after data showed that US oil inventories fell last week, while traders were cautious as they weighed the outlook for the new year.
At 20:39 ET (01:39 GMT), it rose 0.7% to $75.13 a barrel, and contracts expiring in February jumped 0.7% to $71.75 a barrel.
Oil posted a moderate annual loss in 2024, and traders entered 2025 with a cautious stance as they braced for an oversupplied market this year.
API reports decline in US oil inventories
US oil inventories fell by 1.4 million barrels last week, reports said Tuesday.
Lower US oil inventories indicate increased demand for crude oil, which could be good for crude prices. When inventories decline, traders may buy back into the oil market, which could cause prices to rise.
EIA, the statistical arm of the US Department of Energy, will release its weekly data later Thursday.
Traders will wait to see if the official inventory report confirms this decline. These official figures provide insight into the supply and demand dynamics of the US crude oil market, which affects pricing and economic decisions.
The oil market is preparing for oversupply in 2025
Despite the decline in inventories, the latest EIA data showed that US oil production remains near record levels, and the incoming Donald Trump administration is likely to approve policies that would focus on increasing domestic fossil fuel production.
The International Energy Agency recently said that the oil market will still receive adequate supplies, despite rising demand expectations for 2025.
The outlook for oil demand hinges on the hope that China, the world's largest oil importer, will be able to revive its economy, especially since there are concerns about a potential oversupply due to expected increases in production from non-OPEC countries.
Chinese President Xi Jinping said in his New Year speech on Tuesday that the world's largest oil importer will implement more proactive policies to boost growth in 2025.
Traders remain cautious about the outlook as rising supply and tepid recovery in demand weigh on balance sheets.
