Oil rates decrease due to increasing concerns over anticipated supply surplus in 2025
Date
12/15/2024 7:30:37 AM
(MENAFN) Oil prices saw a slight decline on Friday, fueled by growing concerns over an anticipated supply surplus in 2025, though expectations of higher demand from the world’s largest oil consumers, the US and China, helped limit the losses. The international oil benchmark, brent crude, fell by 0.15 percent, settling at USD73.20 per barrel at 10:19 a.m. local time (0719 GMT), compared to the previous session's close of USD73.31. Similarly, the US benchmark, West Texas Intermediate (WTI), decreased by 0.11 percent, dipping to USD69.71 per barrel from USD69.79 in the prior session.
The International energy Agency (IEA) released its latest oil market report, forecasting a rise in global oil supply by 1.9 million barrels per day (bpd) to 104.8 million bpd in 2025, despite the ongoing OPEC+ production cuts. However, global oil demand is expected to increase by 1.08 million bpd, reaching about 103.9 million bpd in the same period. While this growth in demand is positive, the IEA pointed out that a surplus in oil supply is likely, as non-OPEC+ countries are expected to boost their output by around 1.5 million bpd.
In addition to supply and demand dynamics, the strengthening US dollar also played a role in pushing oil prices lower. With the anticipation of US interest rate cuts in the near future, the dollar has continued to rise in value. This makes oil, which is priced in dollars, more expensive for buyers using other currencies, further contributing to the decline in crude oil prices. The US dollar index, which measures the value of the dollar against other major currencies, rose 0.14 percent to 106.84.
Despite the decline in oil prices, the expectation of increased demand from major oil-consuming nations like the US and China helped to cap further losses. As the global economic recovery progresses, particularly in these key markets, oil prices are likely to remain volatile. The market will continue to monitor geopolitical events and monetary policies, as they will be key drivers of future price movements.
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