SINGAPORE: Oil prices steadied on Friday, set to mark their first weekly increase since late November, driven by fresh sanctions on Iran and Russia, which heightened supply concerns. However, market sentiment remained cautious due to a surplus outlook.
Brent crude futures nudged up by 7 cents to $73.48 per barrel at 7:34 a.m. Saudi time, while US West Texas Intermediate crude rose 9 cents to $70.11 per barrel.
Both benchmarks are poised for a weekly gain of over 3%, supported by worries over supply disruptions from stricter sanctions on Russia and Iran, as well as expectations that China’s stimulus measures could boost demand in the world’s second-largest oil consumer.
Yeap Jun Rong, a market strategist at IG, noted that recent stability followed oil’s defense of a crucial technical level at $71. “However, there’s not enough conviction yet to trigger a stronger price rebound,” he added.
Chinese data revealed that crude imports grew year-on-year for the first time in seven months in November, fueled by lower prices and stockpiling. Warren Patterson, ING’s head of commodities research, commented, “We’ve seen a recovery in refinery margins since September’s lows, but it doesn’t fully explain the surge in November crude imports.”
Imports by the world’s top oil importer are expected to remain high into early 2025, as refiners increase purchases from Saudi Arabia, lured by lower prices, while independent refiners utilize their quotas.
The International Energy Agency (IEA) raised its 2025 global oil demand growth forecast to 1.1 million barrels per day from 990,000 bpd, attributing the rise to China’s recent stimulus measures. However, it also projected a surplus for next year, as non-OPEC+ nations, including Argentina, Brazil, Canada, Guyana, and the US, are set to boost supply by around 1.5 million barrels per day.
“With a balanced outlook, there’s little reason for prices to break out of this range in the near term,” Patterson noted.
Meanwhile, three of Canada’s largest oil producers anticipate higher output in 2025. Goldman Sachs predicts that US Lower 48 shale oil production will expand by 600,000 bpd in 2025, though growth could slow if Brent prices drop below $70 per barrel.
Investors are also speculating that the Federal Reserve will cut interest rates next week, followed by further reductions in 2024, after recent economic data showed an unexpected rise in weekly unemployment claims.
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