Oil prices edge higher amid supply concerns, forecast surplus

Oil prices rose slightly on December 13, on track for their first weekly increase since November's end. 

The rise was driven by concerns over supply disruptions from new sanctions on Iran and Russia, though a forecasted market surplus kept prices in check, Caliber.Az reports per foreign media.

By 07:16 GMT, Brent crude futures were up by 5 cents, reaching $73.46 per barrel, while US West Texas Intermediate crude rose 8 cents to $70.10 per barrel. Both contracts are poised for a weekly gain of over 3%, as fears of supply interruptions from the intensified sanctions on Russia and Iran persist. Additionally, expectations that Chinese stimulus measures could boost demand in the world's second-largest oil consumer are supporting prices.

Yeap Jun Rong, a market strategist at IG, noted that recent stabilization in oil prices followed a key technical support level of $71. However, he added, "there has not been enough momentum to trigger a more significant price recovery as yet."

Chinese data revealed a rise in crude imports in November, marking the first year-on-year increase in seven months. The boost is attributed to lower prices and stockpiling efforts. Warren Patterson, ING's head of commodities research, observed that although refinery margins had improved since September, this alone did not account for the increase in crude imports.

Imports from China, the world's largest oil importer, are expected to remain elevated into early 2025. Refiners are taking advantage of lower prices from top exporter Saudi Arabia, while independent refineries rush to utilize their quotas.

The International Energy Agency (IEA) raised its global oil demand growth forecast for 2025 to 1.1 million barrels per day (bpd), up from 990,000 bpd. This revision was driven by China's recent stimulus measures, according to the IEA's latest report. However, the agency also predicted a supply surplus for next year, with non-OPEC+ nations expected to boost output by around 1.5 million bpd, led by Argentina, Brazil, Canada, Guyana, and the United States.

Patterson from ING added, "With a relatively balanced outlook, there is little reason for prices to break out of this range for now."

Canada's three largest oil producers are forecasting increased output in 2025, adding to record production from the United States. Goldman Sachs predicts that US shale oil production will grow by 600,000 bpd in 2025, although growth could slow if Brent prices fall below $70 per barrel.

In addition, investors are anticipating that the Federal Reserve will reduce borrowing costs next week, with further cuts expected in 2025 following a surprise increase in weekly unemployment insurance claims.

By Aghakazim Guliyev