WTI Crude Oil Prices Rise as China’s Manufacturing Expands by $411 Billion Stimulus

Oil prices edged higher on Tuesday as China’s manufacturing activity grew for the third consecutive month in December.

Although the expansion rate slowed, the growth reflects the positive effects of China’s record 3 trillion yuan ($411 billion) stimulus announced for 2025. This substantial injection into the economy aims to revive industrial production and fuel demand in the world’s second-largest economy.

However, longer-term concerns remain. Both OPEC and the International Energy Agency (IEA) have revised their oil demand forecasts for 2025 downward. Sluggish economic recovery and declining demand from major consumers, including China, weigh heavily on the market’s outlook.

Even with OPEC+ delaying planned production hikes until April 2025, rising output from the U.S. and non-OPEC producers is expected to surpass global demand.

U.S. Stockpile Drawdowns Provide Short-Term Support

Despite broader demand concerns, WTI and Brent crude prices found near-term support from declining U.S. crude inventories. Stockpiles fell by 3 million barrels last week, exceeding expectations. Refinery activity surged during the holiday season, driving increased fuel consumption.

The Federal Reserve’s monetary policy stance will also influence oil prices moving forward. With inflation remaining stubbornly high, the Fed reduced its rate cut projections for 2025 from four to two.

Lower interest rates typically encourage borrowing and economic activity, indirectly boosting energy demand. However, a stronger U.S. dollar, driven by these expectations, could weigh on oil prices by making purchases more expensive for non-dollar consumers.

Market Anticipates Trump’s Economic Policies

Investors are closely monitoring the policy agenda of President-elect Donald Trump. His proposed tax cuts, tariff increases, and deregulation efforts are expected to boost economic growth and inflation. While these measures may support oil demand, they could further strengthen the dollar, adding headwinds for global oil markets.

Technical Outlook: WTI Crude Oil

WTI Crude Oil currently trades at $71.65, up 0.11% during year-end trading. The price is testing immediate resistance at $72.03, with additional resistance at $72.81 and $73.43. On the downside, key support lies at $71.19, followed by $70.51 and $69.42.

WTI Crude Oil Price Chart - Source: Tradingview

The 4-hour chart reveals a breakout above a descending triangle, signaling bullish potential. The RSI at 69.98 approaches overbought levels, while the 50 EMA at $70.17 supports the upward trend. A break above $72.03 could target $72.81, while a decline below $71.19 may reintroduce selling pressure.

Key Insights:

  • Support Levels: Immediate support at $71.19; critical levels at $70.51 and $69.42.

  • Resistance Levels: Immediate resistance at $72.03, with additional targets at $72.81 and $73.43.

  • Momentum Indicators: RSI at 69.98 signals caution; the 50 EMA at $70.17 supports bullish sentiment.

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ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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