Additional sanctions on Iran and Russia heightens supply worry, while a surplus outlook weighs on markets
13 December 2024 - 07:59
by Florence Tan and Siyi Liu
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Singapore — Oil prices stabilised on Friday, heading for their first weekly rise since the end of November, as additional sanctions on Iran and Russia ratcheted up supply worry, while a surplus outlook weighed on markets.
Brent crude futures edged up 7c to $73.48 a barrel by 4.34am GMT, while US West Texas Intermediate crude was at $70.11 a barrel, up 9c.
Both contracts are on track for a weekly gain of more than 3% as concern about supply disruption from tighter sanctions on Russia and Iran, and the hope that Chinese stimulus measures could lift demand in the world’s number two oil consumer support prices.
Recent stabilisations came after oil defended a key technical level of $71, said Yeap Jun Rong, market strategist at IG.
“But there has not been much conviction to prompt a stronger price recovery just yet,” he said.
Chinese data this week showed 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,” said Warren Patterson, ING head of commodities research.
Crude imports by 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.
The International Energy Agency increased its forecast for 2025 global oil demand growth to 1.1-million barrels a day (bbl/day) from 990,000bbl/day last month, thanks to China’s recent stimulus measures, it said in its monthly oil market report.
However, it forecast a surplus for next year, when non-Opec nations were set to boost supply by about 1.5-million barrels a day, driven by Argentina, Brazil, Canada, Guyana and the US.
“I guess with an outlook for a fairly comfortable balance [there is] little reason [for prices] to break out of this range for now,” said Patterson.
Three of Canada’s biggest oil producers forecast higher output in 2025. Building on record US production, Goldman Sachs expects Lower 48 shale oil production to grow by 600,000bbl/day in 2025, though growth could slow if Brent falls below $70 a barrel.
Investors 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.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil set for first weekly increase in three
Additional sanctions on Iran and Russia heightens supply worry, while a surplus outlook weighs on markets
Singapore — Oil prices stabilised on Friday, heading for their first weekly rise since the end of November, as additional sanctions on Iran and Russia ratcheted up supply worry, while a surplus outlook weighed on markets.
Brent crude futures edged up 7c to $73.48 a barrel by 4.34am GMT, while US West Texas Intermediate crude was at $70.11 a barrel, up 9c.
Both contracts are on track for a weekly gain of more than 3% as concern about supply disruption from tighter sanctions on Russia and Iran, and the hope that Chinese stimulus measures could lift demand in the world’s number two oil consumer support prices.
Recent stabilisations came after oil defended a key technical level of $71, said Yeap Jun Rong, market strategist at IG.
“But there has not been much conviction to prompt a stronger price recovery just yet,” he said.
Chinese data this week showed 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,” said Warren Patterson, ING head of commodities research.
Crude imports by 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.
The International Energy Agency increased its forecast for 2025 global oil demand growth to 1.1-million barrels a day (bbl/day) from 990,000bbl/day last month, thanks to China’s recent stimulus measures, it said in its monthly oil market report.
However, it forecast a surplus for next year, when non-Opec nations were set to boost supply by about 1.5-million barrels a day, driven by Argentina, Brazil, Canada, Guyana and the US.
“I guess with an outlook for a fairly comfortable balance [there is] little reason [for prices] to break out of this range for now,” said Patterson.
Three of Canada’s biggest oil producers forecast higher output in 2025. Building on record US production, Goldman Sachs expects Lower 48 shale oil production to grow by 600,000bbl/day in 2025, though growth could slow if Brent falls below $70 a barrel.
Investors 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.
Reuters
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