Oil prices fell by approximately 1% on Monday during volatile trading, following weak economic data from the United States and Germany. The decline ended a five-day rally that had pushed prices to 12-week highs, driven earlier by a softer U.S. dollar and increased energy demand as severe winter weather swept across the U.S. Brent crude futures dropped 35 cents, or 0.5%, to $76.16 per barrel by 1901 GMT, while U.S. West Texas Intermediate (WTI) fell 56 cents, or 0.8%, to $73.40.

These losses moved both benchmarks out of technically overbought territory for the first time in three days. Recent gains had been supported by expectations of additional fiscal stimulus aimed at reviving China’s economy. Energy market activity has surged in recent weeks, with open interest in WTI futures on the New York Mercantile Exchange climbing to 1.933 million contracts on January 3, the highest since June 2023.
Analysts at Eurasia Group noted that oil markets have entered 2025 with balanced supply-and-demand fundamentals but remain influenced by geopolitical risks. They cautioned that sluggish demand growth may be outpaced by increased supplies, particularly from the U.S. and OPEC. Economic reports highlighted challenges in major economies. In the U.S., new orders for manufactured goods declined in November, reflecting weak demand for commercial aircraft and slower business spending on equipment in the fourth quarter, according to data from the U.S. Census Bureau.
Meanwhile, Germany’s annual inflation rate rose more than expected in December, driven by higher food prices and smaller drops in energy costs. Concerns over inflation could prompt central banks to raise interest rates, potentially slowing economic growth and reducing energy demand. Earlier in the session, crude prices rose as a winter storm in the U.S. drove natural gas prices up by as much as 11%. Additional support came from a 1.1% drop in the U.S. dollar against a basket of major currencies, following reports that President-elect Donald Trump was considering tariffs on critical imports.
However, the dollar later pared losses after Trump denied the report, limiting oil’s gains. Market sentiment was further influenced by developments in China, where the yuan weakened to a 16-month low against the dollar amid ongoing trade concerns. In response to stronger demand expectations, Saudi Aramco raised February crude prices for Asian buyers – the first increase in three months -reflecting confidence in regional demand recovery.
Separately, Sudan lifted a force majeure that had blocked crude oil shipments from South Sudan to its Red Sea ports for nearly a year. Improved security conditions allowed the resumption of oil transport, potentially adding to global supply. Despite geopolitical uncertainties and weather-driven demand, analysts remain cautious about the sustainability of recent price gains as economic headwinds persist. – By MENA Newswire News Desk.
