HOUSTON: Oil prices fell around 3 per cent in 2024, slipping for a second consecutive year, as the post-pandemic demand recovery stalled, China's economy struggled, and the US and other non-OPEC producers pumped more crude into a well-supplied global market. Brent crude futures on Tuesday, the last trading day of the year, settled up 65 cents, or 0.88 per cent, to $74.64 a barrel. US West Texas Intermediate (WTI) crude settled up 73 cents, or 1.03 per cent, to $71.72 a barrel. The Brent benchmark settled down around 3 per cent from its final 2023 closing price of $77.04, while WTI was roughly flat compared to last year's final settlement. In September, Brent futures closed below $70 a barrel for the first time since December 2021. This year, Brent broadly traded below the highs seen in the past few years as the post-pandemic demand rebound and price shocks of Russia's 2022 invasion of Ukraine began to fade. Oil is likely to trade around $70 a barrel in 2025 due to weak Chinese demand and rising global supplies, offsetting OPEC+-led efforts to stabilise the market, a Reuters monthly poll showed on Tuesday. A weaker demand outlook in China, in particular, forced both the Organisation of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) to cut their oil demand growth expectations for 2024 and 2025. The IEA projects the oil market entering 2025 in surplus, even after OPEC and its allies delayed their plan to start raising output until April 2025 against a backdrop of falling prices. US oil production rose by 259,000 barrels per day to a record high of 13.46 million barrels per day (bpd) in October, as demand surged to the strongest levels since the pandemic, according to data from the US Energy Information Administration (EIA) on Tuesday. Output is expected 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-cut outlook for 2025 after Fed policymakers this month projected a slower path due to stubbornly high inflation. Lower interest rates generally spur economic growth, which drives energy demand. Some analysts believe supply could tighten next year depending on President-elect Donald Trump's policies, including those on sanctions. He has called for an immediate ceasefire in the Russia-Ukraine war and may reimpose a "maximum pressure" policy towards Iran, which could have major implications for oil markets. "With the possibility of tighter sanctions on Iranian oil with Trump coming in next month, we are looking at a much tighter oil market going into the new year," said Phil Flynn, a senior analyst for Price Futures Group. He also cited firming Indian demand and recent stronger Chinese manufacturing data. China's manufacturing activity expanded for a third consecutive month in December, albeit at a slower pace, suggesting that a wave of fresh stimulus is helping to support the world's second-largest economy. Buoying prices on Tuesday, the US military said it carried out strikes against Ansar Allah targets in Sanaa and coastal locations in Yemen on Monday and Tuesday. The Iran-backed group has been attacking commercial shipping in the Red Sea for over a year in solidarity with Palestinians amid Israel's year-long war in Gaza, threatening global oil flows. Meanwhile, US crude oil stocks fell last week while fuel inventories rose, market sources said, citing American Petroleum Institute figures on Tuesday. Crude stocks fell by 1.4 million barrels in the week ended December 27, the sources said on condition of anonymity. Gasoline inventories rose by 2.2 million barrels, and distillate stocks climbed by 5.7 million barrels, they added.
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