Oil Declines as Energy Agency Sees Growth in Crude Supply
Oil prices declined in the global commodity market over heightened supply risk concerns as an energy agency forecasted growth in crude supply. The projection is coming despite recent sanctions on Russia by the European Union.
There are also uncertainties in the Middle East, which pose a huge risk to crude oil supply from the region. Recall that the World Bank expects the oil glut to alter crude oil market dynamics in 2025 while OPEC+ extended output cuts to 2026.
Brent crude fell by 0.15 to $73.20 per barrel, while the US benchmark West Texas Intermediate also declined to $69.71 per barrel. The International Energy Agency (IEA) in its latest oil market report on Thursday forecasted that the global oil supply is on track to rise by 1.9 million barrels per day (bpd) to 104.8 million bpd next year, even in the absence of unwinding of OPEC+ cuts.
The agency also predicted that global demand will rise by 1.08 million bpd to around 103.9 million bpd in 2025. However, it points to a surplus for next year when non-OPEC+ countries are set to boost supply by about 1.5 million bpd.
The strengthening dollar also contributed to the loss in crude oil prices. Ahead of US rate cuts, the dollar has bolstered its value, which in turn is making oil priced in dollars more expensive for holders of other currencies.
The US dollar index, which measures the US dollar’s value against other currencies, rose 0.14% to 106.84. Meanwhile, expectations of increased economic activity in the US and China, the world’s largest oil consumers, are supporting oil demand and limiting price declines.
The likelihood of a 25-basis-point rate cut at the US Federal Reserve’s (Fed) meeting on Dec. 18 is calculated at 96%. Lower policy rates are anticipated to boost economic activity in the US, leading to higher oil demand.
The stimulus package expected to be announced in China, the world’s largest oil importer, is also projected to stimulate economic growth and positively impact oil demand. #Oil Declines as Energy Agency Sees Growth in Crude Supply
Equities Investors Wealth Rises by N152bn as NGX Index Rises
