Crude Oil Prices Decline Amid Demand Concerns

Crude prices traded lower on Friday, heading towards a negative week due to demand concerns and a stronger US dollar impacting investor sentiment. UBS has revised its 2025 Brent crude forecast, predicting potential recovery.

As of 07:20 ET (11:20 GMT), U.S. crude futures (WTI) dipped 1% to $68.03 a barrel, while the Brent contract fell 0.9% to $71.88 a barrel. Both contracts are on track for weekly losses of about 3%.

Recent data from the Energy Information Administration revealed that US crude inventories increased more than anticipated by 2.1 million barrels last week, while gasoline stocks decreased by 4.4 million barrels, marking the lowest level since November 2022.

The International Energy Agency noted that global oil supply is expected to outpace demand in 2025, even with OPEC+ production cuts in effect. UBS has lowered its Brent crude price target for 2025 to $80 per barrel, down from earlier projections of $87 in March and June, and $85 at the end of September.

Despite the reduction, UBS analysts believe the market is overly pessimistic regarding 2025 oil prices. They argue that the outcome of the presidential election and a supportive drilling stance from Donald Trump won’t solely dictate US crude production. Instead, they assert that production may be flat or declining next year if current prices persist, as US crude price movements influence the production curve. Additionally, energy executives are reportedly emphasizing capital discipline.

While tariffs pose a risk to oil demand growth in 2025, anticipated rate cuts and fiscal stimulus are projected to mitigate these economic challenges. UBS concludes that the oil market may be balanced to slightly oversupplied next year, and low positioning among financial investors suggests that oil prices have the potential to recover from current levels.