Oil prices post 3% annual decline, slipping for second year in a row
Shafaq News/ Oil prices fell around 3% in 2024, slipping for a secondstraight year, as the post-pandemic demand recovery stalled, China's economystruggled, and the U.S. and other non-OPEC producers pumped more crude into awell-supplied global market.
Brent crude futures on Tuesday, the last trading day of the year,settled up 65 cents, or 0.88%, to $74.64 a barrel. U.S. West Texas Intermediate(WTI) crude settled up 73 cents, or 1.03%, to $71.72 a barrel.
The Brent benchmark settled down around 3% from its final 2023 closingprice of $77.04, while WTI was roughly flat with last year's final settlement.
In September, Brent futures closed below $70 a barrel for the first timesince December 2021, and this year Brent broadly traded under highs seen in thepast few years as the post-pandemic demand rebound and price shocks of Russia's2022 invasion of Ukraine began to fade.
Oil will likely trade around $70 a barrel in 2025 on weak Chinese demandand rising global supplies, offsetting OPEC+-led efforts to shore up themarket, a Reuters monthly poll showed on Tuesday.
A weaker demand outlook in China in particular forced both theOrganisation of the Petroleum Exporting Countries and the International EnergyAgency (IEA) to cut their oil demand growth expectations for 2024 and 2025.
The IEA sees the oil market entering 2025 in surplus, even after OPECand its allies delayed their plan to start raising output until April 2025against a backdrop of falling prices.
U.S. oil production rose 259,000 barrels per day to a record high of13.46 million bpd in October, as demand surged to the strongest levels sincethe pandemic, data from the U.S. Energy Information Administration (EIA) showedon Tuesday.
Output is set to rise to a new record of 13.52 million bpd next year,the EIA said.
ECONOMIC, REGULATORY OUTLOOK
Investors will be watching the Federal Reserve's interest rate-cutoutlook for 2025 after Fed bank policymakers this month projected a slower pathdue to stubbornly high inflation.
Lower interest rates generally spur economic growth, which feeds energydemand.
Some analysts still believe supply could tighten next year depending onPresident-elect Donald Trump's policies, including those on sanctions. He hascalled for an immediate ceasefire in the Russia-Ukraine war, and he couldre-impose a so-called maximum pressure policy toward Iran, which could havemajor implications for oil markets.
"With the possibility of tighter sanctions on Iranian oil withTrump coming in next month, we are looking at a much tighter oil market goinginto the new year," said Phil Flynn, a senior analyst for Price FuturesGroup, also citing firming Indian demand and recent stronger Chinesemanufacturing data.
China's manufacturing activity expanded for a third-straight month in December,though at a slower pace, suggesting a blitz of fresh stimulus is helping tosupport the world's second-largest economy.
Buoying prices on Tuesday, the U.S. military said it carried out strikesagainst Houthi targets in Sanaa and coastal locations in Yemen on Monday andTuesday.
The Iran-backed militant group has been attacking commercial shipping inthe Red Sea for more than a year in solidarity with Palestinians amid Israel'syear-long war in Gaza, threatening global oil flows.
Meanwhile, U.S. crude oil stocks fell last week while fuel inventoriesrose, market sources said, citing American Petroleum Institute figures onTuesday.
Crude stocks fell by 1.4 million barrels in the week ended Dec. 27, thesources said on condition of anonymity. Gasoline inventories rose by 2.2million barrels, and distillate stocks climbed by 5.7 million barrels, theysaid.
(Reuters)
