Investing.com-- Oil prices rose Thursday at the start of the new year on optimism over China's economic growth as well as data showing that US oil inventories declined last week.
At 08:15 ET (13:15 GMT), Brent Oil Futures rose 1.3% to $72.69 a barrel, and Crude Oil WTI Futures expiring in February jumped 1.3% to $75.62 a barrel.
More Chinese stimulus expected
China's factory activity grew in December, a Caixin/S&P Global survey showed on Thursday, but at a slower pace than expected.
The data echoed an official survey released on Tuesday, which showed that China's manufacturing activity barely grew in December. However, services and construction fared better, with the data suggesting that policy stimulus is trickling into some sectors.
President Xi Jinping's New Year address on Tuesday said that China would implement more proactive policies to promote growth in 2025, and this data points to more stimulus in 2025.
API reports fall in US oil inventories
The American Petroleum Institute reported on Tuesday that US oil inventories fell by 1.4 million barrels last week.
A drop in U.S. oil inventories indicates an increase in demand for crude oil, which can be good for crude prices. When inventories decrease, traders may buy back into the oil market, which can drive up prices.
The U.S. Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy will release its weekly data later in the session.
Traders will be waiting to see if the official inventory report confirms the decline. These official figures provide insights into the supply and demand dynamics of the US crude oil market, influencing pricing and economic decisions.
Oil market braces for an oversupply in 2025
Despite the fall in inventories, the latest EIA data showed that US oil production remains near record levels, and the incoming Donald Trump administration is likely to agree to policies that would focus on ramping up domestic fossil fuel production.
The International Energy Agency recently said that the oil market will remain adequately supplied, despite a rise in demand forecast for 2025.
The outlook for oil demand hinges on the hope that China, the world's largest oil importer, can revive its economy, especially as there are concerns about a potential oversupply due to expected increases in production from non-OPEC countries.
Traders remain cautious about the outlook as rising supply and tepid demand recovery weigh on the balance sheets.
(Peter Nurse contributed to this article.)