Investing.com-- Oil prices rose slightly in Asian trade on Monday as traders took positive cues from the U.S. government avoiding a shutdown over the weekend, while softer inflation data from the country also helped.
Focus remained largely on demand going into 2025, with top oil importer China having signaled plans for more stimulus measures in the coming year. On the supply front, the prospect of more U.S. sanctions against Iran and Russia also presented a tighter outlook for supply.
Brent oil futures expiring in February rose 0.4% to $73.20 a barrel, while West Texas Intermediate crude futures rose 0.4% to $69.75 a barrel by 20:19 ET (01:19 GMT).
Positive US cues support oil prices
Oil traders were relieved by the U.S. government avoiding a potential shutdown over the weekend, as President Joe Biden approved a stop-gap spending bill approving government funding until March.
Fears of a U.S. shutdown had risen last week after President-elect Donald Trump criticized a bipartisan funding bill for its provisions to Democratic lawmakers and proposed a revised bill which also sought to increase the debt limit. The revised was rejected by lawmakers.
Markets had feared that a U.S. shutdown, especially during the holiday season, would disrupt travel and hurt fuel demand.
Oil markets were also supported by a softer dollar, as the greenback retreated from over one-year highs after PCE price index data- the Federal Reserve’s preferred inflation gauge- read lower than expected for November, indicating some cooling in price pressures.
But the reading came just days after the Fed flagged a slower pace of rate cuts in 2025- a scenario that could weigh on economic growth and stymie oil demand.
China demand, tight supplies set the theme for 2025
Concerns over slowing demand and increased supplies saw oil prices trading down more than 5% so far in 2024.
Going into 2025, focus will be squarely on whether more stimulus measures in China can help spur economic growth.
Focus will also be on U.S. policy under President-elect Donald Trump, who has flagged a more protectionist stance towards China and Iran.
The U.S. could impose more sanctions on Iran’s oil industry, further limiting global supplies.
Recent reports said that the U.S. was also considering more sanctions against Russia oil exports.