Oil rises on expanding Chinese factory activity, but set to end year lower

Oil prices rose in early trade on Tuesday after data showed China's manufacturing activity expanded in December, but for a second consecutive year oil was on track to end lower due to demand concerns in top consuming countries.

Brent crude futures rose 47 cents, or 0.7%, to $74.46 a barrel as of 0130 GMT. U.S. West Texas Intermediate crude gained 49 cents, also 0.7%, to $71.48 a barrel. For the year, Brent declined 3.2%, while WTI was down 0.6%.

China's manufacturing activity expanded for a third straight month in December but at a slower pace, an official factory survey showed on Tuesday, suggesting a blitz of fresh stimulus is helping to support the world's second-largest economy.


Chinese authorities have also agreed to issue a record 3 trillion yuan ($411 billion) in special treasury bonds in 2025 to revive economic growth, Reuters reported last week.

While a weak longer-term demand outlook has weighed on prices, they could find short-term support from declining U.S. crude stockpiles, which are expected to have fallen by about 3 million barrels last week.

Both Brent and WTI were buoyed by a larger-than-expected drawdown from U.S. crude inventories in the week ended Dec. 20 as refiners ramped up activity and the holiday season boosted fuel demand. [EIA/S]