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Key Points
Oil prices inched lower on Friday as traders balanced expectations of ample supply with hopes of increased demand driven by Chinese stimulus measures.
The International Energy Agency (IEA) projects non-OPEC+ nations will boost supply by 1.5 million barrels per day (bpd) in 2024, led by the United States, Canada, Brazil, Guyana, and Argentina. This growth is expected to surpass the demand forecast of 1.1 million bpd, which the IEA attributes mainly to China’s recent economic stimulus.
WTI crude settled at $69.618 after reaching an intraday high of $70.693 and a low of $69.083. Brent crude futures traded near $73.33, both benchmarks reflecting a tight trading range.
Picture: Oil drifts after a pullback, with technical indicators pointing towards a more balanced and cautious trading environment, as seen on the VT Markets app.
On the technical front, the MACD indicator shows a slight recovery from earlier bearish momentum, as the histogram moves closer to zero and the signal line indicates stabilisation.
Immediate resistance lies at the session high of $70.693, while support is near $69.083, with consolidation expected between these levels.
Despite ample supply forecasts, prices received support from tighter sanctions on Russia and Iran, along with China’s rising crude imports.
In seven months, November marked the first annual increase in Chinese crude imports, driven by lower prices and stockpiling efforts. Independent refiners are expected to continue boosting imports into early 2025, especially from Saudi Arabia, leveraging discounted prices.
Goldman Sachs forecasts U.S. shale production growth of 600,000 bpd by 2025, although the pace could slow if Brent prices dip below $70.
Traders anticipate a Federal Reserve rate cut next week, which could impact oil demand indirectly by influencing broader economic activity.
Market participants remain cautious, with little impetus for a breakout in prices. Supply-side resilience and Chinese demand recovery will continue to shape the short-term outlook, with traders closely monitoring the $70 resistance level for potential upward moves.
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