LONDON: Oil prices declined on Friday as analysts maintained their forecast of a supply surplus in 2025, despite the OPEC+ decision to delay planned supply increases and prolong deep output cuts until the end of 2026, according to Reuters.

Brent crude futures dropped by 66 cents, or 0.9 percent, to $71.43 per barrel at 2:28 p.m. Saudi time. Meanwhile, US West Texas Intermediate crude futures fell by 65 cents, or 1 percent, to $67.65 per barrel.

For the week, Brent was set to decrease by 2 percent, while WTI was expected to drop by 0.5 percent.

The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, postponed the commencement of oil output increases by three months to April and extended the full unwinding of cuts by a year until the end of 2026.

The group, which accounts for about half of the world's oil production, had originally planned to start unwinding cuts from October 2024. However, a slowdown in global demand, particularly in China, and rising output elsewhere have compelled the group to repeatedly postpone these plans.

“The latest meeting of OPEC+ members yielded a positive surprise... The extension of production cuts indicates that the group remains cohesive and continues to aim for a balanced oil market,” stated UBS analyst Giovanni Staunovo.

On Friday, analysts continued to predict a supply surplus for next year, albeit with some now anticipating a smaller surplus than previously expected.

Bank of America anticipates increasing oil surpluses to drive Brent to an average of $65 per barrel in 2025, while forecasting a rebound in oil demand growth to 1 million barrels per day next year, according to a note released on Friday.

HSBC, on the other hand, now forecasts a smaller oil market surplus of 0.2 million barrels per day, down from 0.5 million barrels per day previously, as noted in their report.

Brent has remained within a narrow range of $70-75 per barrel over the past month, as investors considered weak demand signals from China and heightened geopolitical risks in the Middle East.

“The prevailing view is that the market is confined within its narrow range. While short-term developments might briefly push it higher, the medium-term outlook remains somewhat pessimistic,” commented PVM analyst Tamas Varga.

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