Oil prices rise as China signals bolder economic stimulus, Middle East developments weighed

Oil prices increased as China used their most direct language yet regarding economic stimulus, while traders also kept an eye on developments in the Middle East.

West Texas Intermediate (WTI) crude rose by 1.7 percent, stabilizing above USD 68 per barrel, while Brent crude surpassed USD 72 per barrel.

Chinese leaders pledged to adopt a "moderately accommodative" monetary policy in 2025, indicating further interest rate cuts in the future and a shift from the "prudent" strategy that had been in place for 14 years.

China's easing of monetary policy raised expectations for higher oil demand, but traders remain cautious about potential increases.

Darwei Kong, head of commodities and portfolio manager at DWS Group, stated, "It takes a lot for the Chinese economy to recover," and while the language issued so far suggests potential positive steps, Kong maintains a "cautious outlook."

Attention was also on the fall of Syrian President Bashar al-Assad's regime, which threatens further instability and violence as armed groups vie for power.

Monday's oil gains were not enough to push oil prices beyond the USD 6 per barrel range they’ve been trading in since mid-October.

The market has been affected by competing drivers, including Donald Trump's victory in the US elections, geopolitical tensions in the Middle East, and sluggish Chinese demand, all amid expectations of a significant global surplus next year.

Saudi Arabia cut oil prices for buyers in Asia over the weekend, underscoring weak market expectations following OPEC+'s decision to delay the planned production increase.