Oil Prices Dip Amid Supply Forecasts
By Florence Tan
SINGAPORE (Reuters) – Oil prices inched lower on Friday as investors focused on a forecast of ample supply and shrugged off expectations of higher demand next year from Chinese stimulus measures. They also eyed another Federal Reserve interest rate cut next week.
Brent crude futures edged down 8 cents to $73.33 a barrel by 0125 GMT while U.S. West Texas Intermediate crude was at $69.95 a barrel, down 7 cents.
The International Energy Agency (IEA) expects non-OPEC+ nations to boost supply by about 1.5 million barrels per day (bpd) next year, driven by the United States, Canada, Guyana, Brazil, and Argentina.
Supply is expected to exceed demand growth forecast of 1.1 million bpd, according to the IEA's monthly oil market report, which raised its demand forecast from 990,000 bpd last month. Demand growth is anticipated to be largely in Asian countries due to the impact of China's recent stimulus measures.
Warren Patterson, ING's head of commodities research, noted, "I guess with an outlook for a fairly comfortable balance, little reason (for prices) to break out of this range for now."
Three of Canada's biggest oil producers forecast higher production in 2025. Building on record production in the U.S., Goldman Sachs expects Lower 48 shale oil production to grow by 600,000 bpd in 2025, although the growth could slow if Brent falls below $70 a barrel.
Still, Brent and WTI are on track to notch a weekly gain of more than 3% amid concerns about supply disruption from tighter sanctions on Russia and Iran. Hopes that Chinese stimulus measures could lift demand at the world's No. 2 oil consumer also support prices.
Chinese crude imports grew annually for the first time in seven months in November, driven by lower prices and stockpiling.
"We have seen a bit of a recovery in refinery margins since the September lows, but I don't think it's anything to justify the November crude import volumes," ING's Patterson said.
Crude imports at the world's largest importer are set to stay elevated into early 2025 as refiners opt to lift more supply from top exporter Saudi Arabia, drawn by lower prices, while independent refiners rush to use their quota.
Investors also eyed the impact of tighter sanctions on Russia and Iran on supplies from the major oil producers to China and India. They are betting that the Fed will cut borrowing costs next week and follow up next year with further reductions, after economic data showed weekly claims for unemployment insurance unexpectedly rose.
Comments (0)