Oil futures: Crude extends gains as cold snap looms for US, Europe
Quantum Commodity Intelligence - Crude oil futures Tuesday were climbing higher as benchmarks consolidated the late-December rally with four consecutive gains.
Front-month Mar25 ICE Brent futures were trading at $74.83/b (1815 GMT) versus Monday's settle of $73.99/b, while the intraday peak of $74.73/b was the highest for the contract in nearly two months. The Feb25 contract expired at $74.39/b.
At the same time Feb25 NYMEX WTI was trading at $71.96/b, versus Monday's settle of $70.99/b.
Oil prices have strengthened during the holiday period on improved optimism over China, looming US-led sanctions against Iran, OPEC discipline and forecasts for colder weather impacting the US and Europe.
But the energy price bounce was led by natural gas as US Henry Hub futures soared by over 15% on Monday, while colder weather across Europe and falling inventories underpinned the TTF marker.
Colder weather also plays into oil demand, including the prospect of gas-to-oil switching if the gas price spike continues.
European gasoil barge cracks bounced around $1/b on Monday, nearing a two-week high, although distillate margins continue to underperform.
Despite the December bounce, crude benchmarks were heading for the lowest end-year price since the 2020/2021 pandemic, with Brent having closed out 2023 at just north of $77/b. However, WTI was in line with the 2023 close of $71.65/b.
China
Markets were given a further lift Tuesday as data revealed China's manufacturing activity expanded for a third consecutive month, indicating various stimulus measures are working their way through the economy.
The official manufacturing purchasing managers' index (PMI) - an indicator of sentiment among factory owners - came in at 50.1 for December, which shows positive growth. However, the figure dipped from November's 50.3.
The data comes after Beijing had reportedly agreed to issue more than $400 billion in special treasury bonds during 2025 in a bid to achieve a GDP growth target of around 5%.
However, China faces several economic headwinds in the new year, including the ailing property sector and US tariffs.
"In Asia, notably China, tariffs may appear to be a manageable obstacle if they were the only concern. However, China's economic difficulties go well beyond simple trade conflicts. The nation is also contending with serious domestic consumption challenges and self-induced setbacks in its technology sector," said Stephen Innes of SPI Asset Management.
