Written by Ghislaine Lehr
SINGAPORE (Reuters) – Oil prices fell on Friday on concerns about demand growth in 2025, especially in China, the largest importer of crude, putting global oil standards on track to end the week down about three percent.
Brent crude futures fell 33 cents, or 0.45 percent, to $72.55 a barrel by 0730 GMT. US West Texas Intermediate crude futures fell 32 cents, or 0.46%, to $69.06 per barrel.
Chinese state-owned refiner Sinopec said in its annual energy outlook released on Thursday that China’s crude oil imports may peak by 2025, and the country’s oil consumption will peak by 2027 as demand for diesel and gasoline weakens.
“Benchmark crude oil prices are going through a long consolidation phase as the market heads towards the end of the year, influenced by uncertainty in oil demand growth,” said Imril Jamil, senior research specialist at LSEG.
He added that OPEC+ will require supply discipline to raise prices and calm the nerves of the market, which is tense due to the ongoing reviews of its expectations for demand growth. The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, recently lowered their expectations for growth in global oil demand in 2024 for the fifth month in a row.
Meanwhile, the dollar’s rise to a two-year high also weighed on oil prices, after the Federal Reserve indicated it would be cautious about cutting interest rates in 2025.
A stronger dollar increases the cost of oil for holders of other currencies, while a slower pace of interest rate cuts could weaken economic growth and reduce demand for oil.
JP Morgan expects the oil market to move from equilibrium in 2024 to a surplus of 1.2 million barrels per day in 2025, as the bank expects non-OPEC+ supply to increase by 1.8 million barrels per day in 2025 and OPEC production to remain at current levels.
In a move that could lead to a tightening of supply, G7 countries are considering ways to tighten the price cap for Russian oil, such as a total ban or lowering the price threshold, Bloomberg reported on Thursday.
Russia circumvented the $60 per barrel cap it imposed in 2022 by using a “shadow fleet” of ships, which the European Union and Britain have targeted with more sanctions in recent days.
(Reporting by Colleen Howe in Beijing and Ghislaine Lehr in Singapore; Editing by Sonali Paul and Muralikumar Anantharaman)
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