Oil prices were set to end 2024 with a second-straight annual loss on Tuesday as the post-pandemic demand recovery stalled, China’s economy struggled, and non-OPEC producers including the U.S. pumped more oil into a well-supplied global market. Brent crude futures rose 61 cents, or 0.82%, to $74.60 a barrel, while U.S. West Texas Intermediate crude gained 68 cents, or 0.96%, to $71.67 a barrel. The Brent benchmark was down around 3.2% from its final 2023 closing price of $77.04, while WTI was roughly flat with last year’s final settle. In September, Brent futures closed below $70 a barrel for the first time since December 2021, and this year broadly traded under highs seen in the past few years as the post-pandemic demand rebound and price shocks of Russia’s 2022 invasion of Ukraine began to fade. The highest closing price of 2024 was $91.17 a barrel, marking the lowest annual high since 2021.
Oil prices are likely to be constrained near $70 a barrel in 2025 as weak demand from China and rising global supplies are expected to cast a shadow on OPEC+-led efforts to shore up the market, a Reuters monthly poll showed on Tuesday. A weaker demand outlook in China in particular forced both the Organisation of the Petroleum Exporting Countries and the International Energy Agency to cut their oil demand growth expectations for 2024 and 2025. With non-OPEC supply also set to rise, the IEA sees the oil market going into 2025 in surplus, even after OPEC and its allies delayed their plan to start raising output until April 2025 against a backdrop of falling prices.
U. S. oil production rose 259,000 barrels per day to a record high of 13.46 million bpd in October, as demand surged to the highest levels since the pandemic, data from the U.S. Energy Information Administration showed on Tuesday. Output is set to rise to a new record of 13.52 million bpd next year, the EIA said. U.S. product supplied for crude oil and petroleum, a proxy for demand, rose 702,000 bpd to 21.01 million bpd in October, the highest since August 2019, according to the EIA. Investors will be watching the Federal Reserve’s rate-cut outlook for 2025 after central-bank policymakers this month projected a slower path due to stubbornly high inflation. Lower interest rates generally incentivize borrowing and spur economic growth, which in turn is expected to boost oil demand.
Meanwhile, supply could tighten next year, some analysts have said, depending on the new U.S. administration’s sanctions policies. Traders are gearing up for President-elect Donald Trump’s policies around looser regulation, tax cuts, tariff hikes and tighter immigration. Trump’s calls for an immediate ceasefire in the Russia-Ukraine war, as well as the possible re-imposition of the so-called maximum pressure policy towards Iran could also have major implications for oil markets. “With the possibility of tighter sanctions on Iranian oil with Trump coming in next month, we are looking at a much tighter oil market going into the new year,” said Phil Flynn, a senior analyst for Price Futures Group, also citing firming Indian demand and recent stronger Chinese manufacturing data.
China’s manufacturing activity expanded for a third straight month in December, though at a slower pace, suggesting a blitz of fresh stimulus is helping to support the world’s second-largest economy. Buoying prices on Tuesday, the U.S. military said it carried out strikes against Houthi targets in Sanaa and coastal locations in Yemen on Monday and Tuesday. The Iran-backed militant group has been attacking commercial shipping in the Red Sea for more than a year in solidarity with Palestinians amid Israel’s year-long war in Gaza, threatening global oil flows.
Oil prices set for second-straight annual loss, edge up on the day
