Oil prices experienced a slight decline during light holiday trading, influenced by underwhelming US jobs data and a retreat in natural gas futures. West Texas Intermediate (WTI) crude fell 0.7%, settling below $70 per barrel.
US natural gas futures saw a significant drop of over 5% on Thursday, impacting the broader energy complex. This decline followed forecasts indicating lower-than-expected heating demand. Further pressure came from a rise in recurring US unemployment benefit applications, reaching a three-year high. This dampened the recent rally in broader markets, indirectly affecting crude prices. The low trading volume during the holiday period amplified these downward price movements, with WTI crude trading volumes nearing yearly lows.
WTI Crude Oil Price Chart
Earlier in the day, reports suggested that China was granting local officials greater flexibility in investing government bond proceeds, while maintaining current interest rates. This news initially provided some upward momentum to oil prices. Further support came from the American Petroleum Institute’s report indicating a 3.2 million barrel decrease in commercial crude inventories last week. If confirmed by official data, this would mark the fifth consecutive weekly decline. Crude stockpiles in the US typically decrease in December before rebuilding in the early months of the following year.
“There isn’t much momentum to propel WTI into the new year,” commented Rebecca Babin, senior energy trader at CIBC Private Wealth Group. “Traders are anticipating the inauguration of Trump in January as the next potential catalyst. Until then, trading is likely to remain choppy.”
While crude oil is on track for a minor annual decline, prices have remained within a narrow range since mid-October. Looking ahead to 2025, market participants are assessing the potential impact of Donald Trump’s upcoming presidency, China’s economic support measures, and the outlook for global oil supplies. OPEC+ plans to gradually ease production curbs after a series of postponements. These factors will likely shape the trajectory of oil prices in the coming year. The interplay between geopolitical events, economic indicators, and OPEC+ policies will continue to influence market sentiment and price volatility.
