Crude Oil futures along with Brent and WTI West Texas Intermediate concluded December 2024 with declines, driven by concerns over sluggish demand growth in 2025, particularly in China, and a strengthening US dollar. However, prices edged higher on December 20, 2024, following the release of US inflation data, which indicated a cooling trend. This revived market expectations for further interest rate cuts next year, potentially stimulating global economic growth and consequently boosting Crude Oil consumption.

While prices have shown minor upward movements, the overall market sentiment remained bearish. This bearishness was fueled by disappointing Chinese spending figures, despite the implementation of economic stimulus measures by the Chinese government. These measures have begun to positively impact manufacturing and refining. However, persistent concerns regarding a decline in Crude Oil demand from China, the world's leading oil importer, prompted OPEC+ to postpone plans for increased oil production until April.

While the Fed recently implemented a reduction in interest rates, the market remains apprehensive about the future direction of monetary policy. The recent cooling of inflation data has tempered expectations for further rate cuts, potentially dampening economic activity and consequently reducing Crude Oil demand. This uncertainty surrounding the Fed's policy trajectory has created a sense of unease within the market, contributing to the volatility in Crude Oil prices.

The recent threats of tariffs on various countries, including the European Union, by President-elect Trump, have further exacerbated geopolitical tensions. These threats have the potential to disrupt global trade flows and negatively impact global economic activity, thereby exerting a downward pressure on Crude Oil demand.

However, Crude Oil prices received support earlier this month when OPEC+ decided to delay a planned production increase of 180,000 barrels per day (bpd) from January to April and announced a slower pace for unwinding its production cuts. Additionally, the United Arab Emirates (UAE) also postponed its planned increase in crude production by 300,000 bpd from January to April. This decision effectively pushes back the full restoration of 2.2 million bpd of output, which was previously scheduled to be completed in monthly installments between January 2023 and late 2025, to September 2026.

As per ChemAnalyst, the Crude Oil futures are expected to remain volatile in the upcoming weeks. The decision by OPEC+ to slow the pace of its production increases and the UAE's decision to delay its planned output increase has provided a degree of support to the market. Furthermore, the potential for new sanctions on Iranian and Russian crude exports could further tighten global oil supplies and bolster prices.