Oil prices begin the year higher as freezing weather persists.
Crude oil prices held their gains from the first week of the year into this week, fuelled by severe cold weather across Europe and the US and hopes that the latest round of stimulus announced by the Chinese government would do the trick and revive oil demand.
Oil prices have been volatile this week on the back of severely cold weather in the US and Europe that will push up demand for oil, especially distillates used for heating purposes.
A polar vortex is set to cause snowstorms across swathes of the US, while also dropping temperatures in Europe whilst most of the UK battles subzero temperatures.
In Asia, 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.”
Analysts noted expectations that Trump would tighten the sanctions to Iran’s as he comes into office later this month, 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.
For fuel card users prices are to remain fairly static with little movement up or down for next week.
