Oil prices inched lower on Friday as investors focused on a forecast of ample supply and shrugged off expectations of higher demand next year from Chinese stimulus measures, while eyeing another Federal Reserve interest rate cut next week.
Brent crude futures edged down 8 cents to $73.33 a barrel by 0125 GMT while U.S. West Texas Intermediate crude was at $69.95 a barrel, down 7 cents.
The International Energy Agency expects non-OPEC+ nations to boost supply by about 1.5 million barrels per day (bpd) next year, driven by the United States, Canada, Guyana, Brazil and Argentina.
Supply is expected to exceed demand growth forecast of 1.1 million bpd, IEA said in its monthly oil market report, raising its demand forecast from 990,000 bpd last month. Demand growth would be seen “largely in Asian countries due to the impact of China’s recent stimulus measures”, it said.
“I guess with an outlook for a fairly comfortable balance little reason (for prices) to break out of this range for now,” Warren Patterson, ING’s head of commodities research, said.
Three of Canada’s biggest oil producers forecast higher production in 2025. Building on record production in the U.S., Goldman Sachs expects Lower 48 shale oil production to grow by 600,000 bpd in 2025 although the growth could slow if Brent falls below $70 a barrel. Still, Brent and WTI are on track to notch a weekly gain of more than 3% as concerns about supply disruption from tighter sanctions on Russia and Iran, and hopes that Chinese stimulus measures could lift demand at the world’s No. 2 oil consumer support prices. Chinese crude imports grew annually for the first time in seven months in November, driven by lower prices and stockpiling.
“We have seen a bit of a recovery in refinery margins since the September lows, but don’t think it’s anything to justify the November crude import volumes,” ING’s Patterson said.
Crude imports at the world’s largest importer are set to stay elevated into early 2025 as refiners opt to lift more supply from top exporter Saudi Arabia, drawn by lower prices, while independent refiners rush to use their quota.
Investors also eyed the impact of tighter sanctions on Russia and Iran on supplies from the major oil producers to China and India.
They are also betting that the Fed will cut borrowing costs next week and follow up next year with further reductions, after economic data showed weekly claims for unemployment insurance unexpectedly rose.