Oil Information: Is the Market Set for Losses as China’s Demand Weakens and OPEC+ Cuts Lag?…

Additional strain got here from OPEC+, which downgraded its 2024 international oil demand progress forecast for the fifth consecutive month​. JPMorgan added to the bearish tone, predicting a surplus of 1.2 million barrels per day (bpd) in 2025 as non-OPEC+ provide rises by 1.eight million bpd, whereas OPEC output holds regular. This looming provide overhang might exacerbate the market’s oversupply, preserving costs in verify.

Federal Reserve and Greenback Power Apply Further Stress

The Federal Reserve’s financial coverage performed a pivotal position in shaping oil worth motion. The U.S. greenback surged to close two-year highs earlier within the week, amplifying headwinds for crude by making it costlier for non-dollar holders​. Though inflation information cooled by week’s finish, triggering a slight pullback within the greenback, the Fed’s cautious outlook on future price cuts strengthened fears of slower financial progress.

Increased bond yields and tighter monetary circumstances stemming from the Fed’s “higher-for-longer” stance additional constrained market optimism. Elevated borrowing prices raised the prospect of dampened industrial exercise and vitality consumption, reinforcing draw back dangers for oil demand.

Geopolitical Tensions Add Complexity however Restricted Help

Geopolitical developments injected volatility however failed to supply important upside for oil costs. The G7 floated the thought of stricter enforcement of Russian oil worth caps, however Russia’s use of a “shadow fleet” of tankers to avoid sanctions blunted the potential affect​.

A extra quick wildcard emerged from the U.S., the place President-elect Donald Trump threatened tariffs on the European Union if the bloc fails to handle its commerce deficit with the U.S.​. Trump’s feedback instructed that elevated oil and fuel imports from the U.S. might mitigate commerce tensions. Nonetheless, the specter of tariffs raised issues over retaliatory measures from Europe, doubtlessly disrupting transatlantic commerce and impacting broader vitality markets.

In the meantime, the European Union and the UK imposed sanctions on 53 vessels concerned in transporting illicit Russian crude, however analysts anticipate minimal disruption to produce flows within the close to time period​.