Washington (awp/afp) – Oil prices fell on Friday, still weighed down by operators' concerns about a possible surplus of crude by 2025, as well as a drop in demand.
The price of a barrel of Brent from the North Sea, for delivery in January, lost 2.09% to close at $71.04.
That of a barrel of American West Texas Intermediate (WTI), expiring in December, fell by 2.51% to $67.02.
“The outlook for the oil market is not particularly encouraging (…) things will have to evolve on the supply side,” noted Bart Melek of TD Securities.
“The market expects a surplus of more than a million barrels (per day) next year,” he added.
This surplus “could be even more pronounced if OPEC+ (the organization of oil exporting countries and its allies) implements its plans to restore previously interrupted production,” explained John Plassard, analyst at Mirabaud, referring to the report from the International Energy Agency (IEA), published Thursday.
In early November, several OPEC+ members, including Saudi Arabia and Russia, announced an extension of their oil production cuts until the end of December.
If “Saudi Arabia is no longer willing to cede market share in favor of higher prices and (OPEC+) therefore sticks to the planned expansion of production, there is a risk of “massive oversupply next year, which should lead to a significant drop in prices,” Barbara Lambrecht of Commerzbank argued in a note.
Operators attribute a probability of 81% to the confirmation at the OPEC+ meeting on December 1 of a gradual reopening of the valves at the beginning of January, according to the CME Group estimate.
Other countries such as “Brazil, Canada and Guyana” should also contribute to the increase in production, explains Jorge Leon, analyst at Rystad Energy.
At the same time, the main forecasters have all revised downwards their estimates for consumption growth next year.
The IEA has thus warned that the trend is towards a “significant slowdown” in demand for black gold, which could experience an excess supply in 2025.
China's slowdown, weighed down by sluggish consumption and a severe real estate crisis, is weighing down demand for oil, with the price of the resource being strongly correlated to the economic health of the Asian giant, the world's leading oil importer.
“We will have to wait for more political initiatives from Beijing,” underlined M Melek.
In addition, since the announcement of Donald Trump's return to the White House, oil has suffered from the explosion of the American currency.
Since the price of oil is most often expressed in dollars, a stronger greenback makes it relatively more expensive for foreign buyers and reduces demand.
Furthermore, “for the moment, part of the geopolitical risk premium linked to the Middle East has been ruled out,” Bart Melek also added.
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