Oil Advances as Dwindling Inventories Counter China Weakness
Oil advanced, with traders weighing short-term supply risks against further signs of Chinese economic weakness.
West Texas Intermediate rose close to $74 a barrel in a bid for its seventh gain in the last nine sessions. Oil prices fell more than 1% on Wednesday after futures failed to breach a key technical level.
Crude’s strong start to 2025 has been supported by continued US inventory drawdowns and potential risks to Iranian supply in a second Donald Trump presidency. Cold weather is expected to boost demand for heating fuels this month, and Russia’s seaborne crude exports recently slumped to their lowest since August 2023.
Limiting crude’s gains, consumer inflation in China fell further toward zero, a setback for government efforts to revive demand. Recent strength in the US dollar has also made commodities priced in the currency — including oil — less attractive to some buyers.
Concerns also persist that supplies may exceed demand. Many banks have retained their bearish outlooks, and Standard Chartered Plc cut its 2025 Brent crude forecast by $5, to $87 a barrel, and lowered its first-quarter estimate by $7, to $82.
“The outlook is slightly bearish,” Viktor Katona, head of oil analysis at consultancy Kpler, said at the online Gulf Intelligence Outlook Forum. “We’re not going to see demand growth above 1 million barrels a day at any point in the future. With the China that we currently have, it’s not going to happen. The slowdown is evident.”
WTI for February delivery rose 0.9% to $73.98 a barrel at 10:30 a.m. in New York. Brent for March delivery gained 0.9% to $76.85 a barrel.
Source: Bloomberg
