Oil prices climbed by 1% as traders awaited key U.S. inflation data and reports from OPEC and the International Energy Agency (IEA).
November’s U.S. consumer price index figures, expected later Wednesday, are anticipated to guide monetary policy ahead of the Federal Reserve's upcoming meeting.
Adding to market tension, the Biden administration is reportedly planning new sanctions on Russia's oil trade, potentially tightening supply and driving prices higher. Meanwhile, crude prices have remained in a narrow range since October, influenced by Middle East tensions and shifting supply forecasts. The U.S. Energy Information Administration (EIA) revised its outlook, predicting a minor deficit in 2024 instead of a surplus. UBS analyst Giovanni Staunovo noted that the EIA now projects a balanced market by 2025, surprising some experts who had forecast oversupply.
China, the world's largest crude importer, is also influencing markets. The country announced plans for an "appropriately loose" monetary policy in 2025, its first such easing in 14 years, aimed at stimulating economic growth. This news boosted hopes for increased oil demand. November crude imports in China rose over 14% year-on-year, marking the first annual growth in seven months. However, market strategist Yeap Jun Rong cautioned that price gains hinge on further policy details.
In the U.S., API data revealed a 499,000-barrel increase in crude stocks last week, alongside significant rises in gasoline and distillate inventories. Official EIA data, expected later Wednesday, could shed more light, with analysts forecasting a decline in crude but an increase in gasoline stocks.
OPEC and the IEA will release their monthly supply-and-demand reports this week, offering additional market insights.