Oil prices slipped slightly on Friday as markets weighed forecasts of ample supply in 2025 against expectations of stronger demand driven by China’s economic stimulus and a potential Federal Reserve rate cut next week.
Brent crude futures fell $0.08 to settle at $73.33 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped $0.07 to $69.95 per barrel in early Asian trading.
The International Energy Agency (IEA) anticipates non-OPEC+ nations will increase oil output by 1.5 million barrels per day (bpd) in 2025, led by the United States, Canada, Guyana, Brazil, and Argentina. This supply growth is expected to surpass demand growth, which the IEA revised upward to 1.1 million bpd from last month’s forecast of 990,000 bpd, driven largely by Asian countries benefiting from China’s recent stimulus measures.
Markets Remain Range-Bound Despite Weekly Gains
“Given the outlook for a fairly balanced market, there’s little reason for prices to break out of the current range,” said Warren Patterson, ING’s head of commodities research.
Despite Friday’s decline, Brent and WTI crude are poised to record a weekly gain exceeding 3%, supported by:
- Supply concerns from tighter sanctions on Russia and Iran.
- Optimism over China’s economic recovery boosting global demand.
China’s Crude Imports Rise Amid Stimulus and Stockpiling
China, the world’s second-largest oil consumer, saw its crude imports grow annually for the first time in seven months in November, driven by lower global oil prices and stockpiling efforts.
“We’ve seen a recovery in refinery margins since September, but it doesn’t fully justify the surge in November crude import volumes,” Patterson noted.
Looking ahead, China’s crude imports are expected to remain elevated into early 2025 as refiners capitalize on lower prices, particularly from top exporter Saudi Arabia. Independent refiners, in particular, are racing to use up their quotas, further boosting demand.
Supply Risks and Central Bank Actions in Focus
On the supply side, investors are closely monitoring the impact of tighter sanctions on Russia and Iran, which could reduce exports to major buyers like China and India.
At the same time, markets are betting on a Federal Reserve interest rate cut next week, spurred by unexpectedly high unemployment claims. Analysts expect further rate reductions in 2025, which could support economic growth and oil demand.
Goldman Sachs projects U.S. shale production in the Lower 48 states to rise by 600,000 bpd in 2025, though this growth may decelerate if Brent crude prices drop below $70 per barrel.
