Oil Steadies Near November Lows With Outlook for Demand in Focus
(Bloomberg) -- Oil steadied near its lowest level this month, with the outlook for demand in focus after OPEC cut projections on China’s slowdown.
Brent crude traded near $72 a barrel after ending little changed on Tuesday, with West Texas Intermediate above $68. OPEC shaved demand-growth forecasts for a fourth consecutive month, yet the cartel remains more bullish than other market watchers, with many analysts warning of a glut next year.
Crude has traded in a tight range since the middle of last month, with traders tracking trends in Chinese consumption, Middle East tensions, and the implications of Donald Trump’s re-election to the Oval Office. After the monthly report from OPEC, the US will issue its short-term outlook later Wednesday, followed by the International Energy Agency’s view on Thursday.
“The absence of a more direct fiscal stimulus out of China has been casting a shadow on the oil demand outlook, coupled with the prospect of higher US oil production with a Trump presidency,” said Yeap Jun Rong, a market strategist with IG Asia Pte. In addition, OPEC+ plans to raise output, he said.
Reflecting the bearish outlook, timespreads have weakened. While they remain in a bullish backwardated structure — with nearby contracts above longer-dated ones — the gap has narrowed. Among the most notable is WTI’s prompt spread, which hit the lowest since February earlier this week.
“The oil market appears to be heading for a sizeable surplus in 2025, driven by a combination of decelerating oil demand growth, still-robust non-OPEC supply growth, and OPEC’s ambition to start growing supply,” Morgan Stanley analysts including Martijn Rats said in a report. The bank cut Brent forecasts, with the first-quarter 2025 outlook reduced $5.50 to $72 a barrel.
©2024 Bloomberg L.P.
KEEPING THE ENERGY INDUSTRY CONNECTED
Subscribe to our newsletter and get the best of Energy Connects directly to your inbox each week.
By subscribing, you agree to the processing of your personal data by dmg events as described in the Privacy Policy.