Oil prices remained steady, positioning themselves for a modest weekly rise, their first since late November.
Oil prices stabilized as tighter sanctions on Iran and Russia escalated concerns over supply disruptions, while a mixed outlook on supply and demand weighed on the market.
Price Movements and Weekly Outlook
Brent crude futures rose by 7 cents to $73.48 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 9 cents, reaching $70.11 a barrel.
Both contracts are set to register weekly gains exceeding 3%.
Supply disruptions due to sanctions on Russia and Iran, along with expectations of increased demand from Chinese stimulus measures, have been supporting prices.
Despite this, oil prices have stabilized after defending a key technical level of $71, according to Yeap Jun Rong, market strategist at IG. However, he noted, “There has not been much conviction to prompt a stronger price recovery just yet”.
China’s Crude Imports and Economic Stimulus
Recent data from China revealed a growth in crude imports, rising annually for the first time in seven months in November.
The uptick was driven by lower prices and stockpiling efforts. However, Warren Patterson, ING’s head of commodities research, cautioned that the recovery in refinery margins since September should not be overstated.
He added, “It’s not enough to justify the November crude import volumes”.
Patterson expects crude imports from China, the world’s largest importer, to remain elevated into early 2025, as refiners increase purchases from Saudi Arabia, attracted by lower prices.
Additionally, independent refiners are keen to utilize their quotas.
Demand Growth and Supply Outlook
The International Energy Agency (IEA) has raised its forecast for global oil demand growth in 2025. It now predicts an increase of 1.1 million barrels per day (bpd). This is up from the 9,90,000 bpd forecasted last month.
The revision is largely attributed to China’s recent stimulus measures.
The IEA also forecast a surplus in 2025. Non-OPEC+ countries are expected to boost supply by around 1.5 million bpd. This increase will be driven by production rises in Argentina, Brazil, Canada, Guyana, and the U.S.
North American Production and Investor Sentiment
As Canada’s top oil producers project higher output in 2025, the U.S. is also set to see continued growth.
Goldman Sachs anticipates that shale oil production in the Lower 48 states will increase by 600,000 bpd in 2025.
However, this growth could slow if Brent crude prices fall below $70 per barrel.
As reported by reuters.com, investors are betting on further interest rate cuts by the Federal Reserve, with expectations of reductions in borrowing costs next week and throughout 2025.
