Oil Prices Start the Week at a Three-Month High

January 6, 2025 by admin

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

By Irina Slav – Jan 06, 2025, 1:18 AM CST

Crude oil prices extended their gains from the first week of the year into this week, fueled by frigid weather and hopes that the latest round of stimulus announced by the Chinese government would do the trick and revive past rates of oil demand growth.

Brent crude was trading at $76.30 per barrel at the time of writing, and West Texas Intermediate was changing hands for $73.77 per barrel, both making solid gains over the past week.

The latest stimulus update from Beijing came last Friday, when the government said it would boost the issuance of so-called ultra-long special government bonds, to fund large-scale equipment upgrades and stimulate consumer spending.

“The size of ultra-long special government bond funds will be sharply increased this year to intensify and expand the implementation of the two new initiatives,” Yuan Da, deputy secretary-general of the Chinese National Development and Reform Commission said, as quoted by Reuters.

“The oil market is off to a strong start in 2025 with ICE Brent trading above $76/bbl,” ING commodity analysts Warren Patterson and Ewa Manthey wrote in a note earlier today. “This is despite the oil balance for 2025 looking comfortable. The strength in the market appears to be on the back of a stronger physical market in the Middle East.”

The analysts noted expectations that Trump would tighten the sanction noose around Iran's neck as soon as he comes into office, which would naturally boost oil prices and possibly motivate OPEC+ to roll back some of its production cuts.

In the context of the Trump presidency and Iran sanctions, Goldman Sachs earlier this month predicted Iranian oil production would fall in the second quarter of the year by as much as 300,000 barrels daily. The bank's analysts added that prices could peak at $78 per barrel of Brent crude in June.

By Irina Slav for Oilprice.com