Crude oil futures closed at $66.55, down by $1.13 or 1.67%, with a low of $66.40 and a high of $67.91. The International Energy Agency (IEA) predicts global oil demand will increase by 1 million barrels per day (bpd) in 2025, compared to 0.83 million bpd in 2024.
Supply is anticipated to exceed demand by 0.6 million bpd, as OPEC+ plans to restore 2.2 million bpd of production cuts alongside rising output from North and South America. Potential peace in the Russia-Ukraine conflict may introduce Russian oil into the market, potentially reducing prices.
### Economic Uncertainty And Market Pressures
Additionally, economic uncertainty from U.S. trade wars, including new tariffs, presents risks. Conversely, expectations of three Federal Reserve rate cuts by year-end could encourage demand growth.
The 10-year yield stands at 4.279%, decreased from January’s high of 4.809%, but still above March’s low of 4.108%.
This data presents a clear picture of where things currently stand and what might come next. The downward movement in crude oil futures suggests a reaction to supply and demand outlooks, external economic pressures, and potential shifts in geopolitical stability. The International Energy Agency’s forecast of global oil consumption rising by 1 million barrels per day in 2025, up from 0.83 million bpd in 2024, signals a steady but moderate increase in demand. However, with supply expected to rise by 0.6 million bpd, largely due to OPEC+ reversing production cuts and growing output from the Americas, upward price momentum may face considerable resistance.
The fragile possibility of peace between Russia and Ukraine introduces another variable. A resolution might increase Russian oil exports, which could push prices down further. Should this materialise, the assumption that current levels of production discipline within OPEC+ will continue may prove overly optimistic. If producers perceive a need to defend market share rather than price, supply growth could accelerate beyond current projections.
At the same time, economic policies set by Washington add another layer of complexity. Recently imposed tariffs and threats of further trade restrictions introduce uncertainty for global commerce. Manufacturing activity, particularly in energy-intensive sectors, may react negatively if costs rise and supply chains face disruption. While these risks could weigh on oil consumption, the expectation of three Federal Reserve rate cuts before year’s end offers the opposite effect. Lower interest rates tend to encourage borrowing and investment, which, in turn, supports economic growth and energy demand.
### Bond Markets And Interest Rates
Bond markets tell their own story. The 10-year Treasury yield now sits at 4.279%, down from January’s peak of 4.809%, though still higher than the 4.108% low recorded in March. This decline hints at shifting investor sentiment regarding inflation and economic growth. Should yields continue to drop, borrowing conditions would ease, potentially bolstering industrial activity and energy demand. However, if inflation surprises to the upside, the Federal Reserve may hesitate on expected rate adjustments, tempering some of the anticipated demand growth.
All these factors feed into short-term expectations. Supply-side pressures are mounting, while demand faces both supportive and limiting influences. Balancing these forces requires a close watch on policy decisions, geopolitical updates, and macroeconomic trends in the coming weeks.
