Oil Prices Inch Higher on Supply Tightness
Oil Prices Inch Higher on Supply Tightness | OilPrice.com
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Crude oil prices moved slightly higher earlier today on signs that global supply is tightening although worry about demand continued to weigh on benchmarks.
At the time of writing, Brent crude was trading at $71.97 per barrel, with West Texas Intermediate at $68.18 per barrel, after OPEC on Tuesday revised down its demand growth outlook for the year yet again.
In its latest Monthly Oil Market Report, the oil-producing cartel said it now expected global oil demand to grow by 1.82 million barrels daily this year, which was down from a previous demand growth estimate of 1.93 million barrels daily.
On the flip side, current demand seems to be rather healthy, according to ANZ. The bank said, as quoted by Reuters, in a note this week that “Crude oil prices edged higher as tightness in the physical market offset bearish sentiment on demand. Buyers in the physical market have been particularly active, with any available cargoes being snapped up quickly.”
“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 said, as quoted by Bloomberg. The bank revised down its price forecast for Brent crude by as much as $5.50 per barrel, with the first-quarter 2025 average seen at $72 per barrel.
When it comes to oil demand worries, China remains the key focus. “We may expect prices to consolidate around current levels for longer,” IG analyst Yeap Jun Rong said, as quoted by Reuters. “The absence of a more direct fiscal stimulus out of China has been casting a shadow on oil demand outlook, coupled with the prospects of higher US oil production with a Trump presidency and looming OPEC+'s plans for an output raise,” he added.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
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