Oil Market Outlook
Investing.com — Oil markets have been overshadowed by a post-election surge in risk assets. Challenging fundamentals, including increased supply and slower demand, suggest a precarious end to 2023 and an uncertain 2025 for crude, according to Piper Sandler's recent note.
> "We have not met anyone bullish oil. In talking with numerous clients, we encounter sullen resignation about the bearish outlook for 2025, even in Canada," Piper Sandler stated.
Prospects for oil demand growth remain dim. On the supply side, there are many sources contributing to increased output, including non-OPEC nations and core OPEC members.
Though speculative positioning is nearing neutral after extreme bearishness in late September, short-term downside risks persist, Piper Sandler observed.
For 2025, Piper Sandler estimates demand growth at 1.4 million barrels per day, double the growth rate for this year. However, this forecast depends on a rebound in China's economy and the impact of rate cuts spurring a cyclical upturn.
Geopolitical uncertainties add to the challenges facing the oil market. The Republican sweep of Congress and President-elect Trump's "America First" stance have pushed the U.S. dollar to new highs, which typically exerts downward pressure on dollar-denominated commodities like oil.
Additionally, Piper Sandler highlights that policymaking in Brussels and Beijing is not particularly promising, further complicating the economic outlook that informs oil demand projections.
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