PTBP Web Desk
Oil prices showed minimal movement during Asian trading on Thursday, balancing between weak global demand, higher U.S. inventories, and the latest round of European Union sanctions on Russian oil exports.
Brent crude futures rose by 14 cents, reaching $73.66 per barrel by 0519 GMT, while U.S. West Texas Intermediate (WTI) crude futures saw a modest increase of 6 cents, trading at $70.35 per barrel. On Wednesday, both benchmarks experienced a notable uptick of over $1 each.
Factors Impacting Oil Prices
Weak Demand Forecasts and Rising Inventories
Oil demand forecasts continue to face downward revisions, with the Organization of the Petroleum Exporting Countries (OPEC) cutting its demand growth projections for 2025 for the fifth consecutive month. This latest adjustment represents the largest revision to date.
According to analysts at ANZ, investors are closely monitoring the International Energy Agency’s (IEA) upcoming market balance estimates for 2025, which are expected to incorporate OPEC’s revised outlook.
In the United States, the world’s top oil consumer, gasoline and distillate inventories have increased beyond expectations. Data from the Energy Information Administration (EIA) highlighted this rise, further dampening market sentiment.
Global oil demand has grown at a slower-than-expected rate in December. Analysts at JPMorgan noted that while demand remains resilient, jet fuel consumption has seen a slight dip, tempering growth over the past week.
China’s Role in Oil Demand
China, the world’s largest importer of oil, has been a key player in shaping demand forecasts. Despite weak current demand, there are signs of potential recovery. Chinese crude imports increased annually for the first time in seven months this November, recording a 14% rise compared to the previous year.
This week, Beijing unveiled plans to implement an “appropriately loose” monetary policy in 2025. Market analysts anticipate this move could stimulate economic activity and bolster oil demand in the coming year.
EU Sanctions and Their Impact
The European Union continues to tighten its grip on Russian oil exports. On Wednesday, EU ambassadors approved a 15th package of sanctions targeting Russia’s “shadow fleet” of ships, which have been instrumental in circumventing the $60 per barrel price cap imposed by the G7 on Russian seaborne crude oil since 2022.
These new sanctions are designed to restrict Russian oil flows further, intensifying pressure on the Kremlin amid its ongoing conflict in Ukraine.
U.S. Position on Russian Oil Revenue
The United States is also exploring additional measures to reduce Russia’s oil revenue. Treasury Secretary Janet Yellen stated on Wednesday that the U.S. is seeking innovative ways to curb Russian earnings from oil exports. She noted that current lower global oil demand presents an opportunity to implement more stringent sanctions.
In response, the Kremlin criticized the potential tightening of U.S. sanctions. A spokesperson suggested that such moves indicate the Biden administration’s intent to leave behind strained U.S.-Russia relations.
Market Outlook and Anticipations
Investors are now turning their attention to upcoming monetary policy decisions, particularly the U.S. Federal Reserve’s meeting next week. Any hints of interest rate cuts could significantly influence market dynamics, potentially impacting oil prices.
While global demand remains a concern, analysts remain optimistic about a rebound in 2025, driven by potential economic growth in China and other major markets.
