Oil posted a weekly loss as analysts projected a “significant” supply surplus in 2025, despite an Opec+ decision to extend its voluntary output cuts of 2.2 million barrels a day until the end of March next year.
Brent, the benchmark for two thirds of the world’s oil, fell 2.5 per cent, while West Texas Intermediate, the gauge that tracks US crude, registered a drop of 1.2 per cent for the week ending December 6.
Brent settled at $71.12 a barrel on Friday, shedding 1.4 per cent. WTI reached $67.20 a barrel, falling 1.6 per cent on Friday. A weakening of the US dollar failed to buffer oil prices, underscoring that the market’s main concern is the imbalance between supply and demand, analysts said.
“Crude oil futures remain subdued, with ongoing concerns about weak demand, particularly from China, continuing to pressure the oil market,” Hani Abuagla, senior market analyst at XTB MENA, said.
This comes after Opec+ on Thursday announced that it has extended its supply cuts until the end of 2026 and postponed planned output increases until April 2024.
“While this decision aims to manage supply, the persistent slowdown in global demand, especially from key consumer markets, creates a bearish outlook for the near term,” Mr Abuagla said. “This prolonged supply restraint is unlikely to offset the broader concerns over demand weakness, particularly as economic growth appears subdued.”
The International Energy Agency said in November that current balances suggest global supply will exceed demand by more than 1 million bpd next year, even if the Opec+ cuts were to remain in place.
Oil markets anticipate a surplus in the first half of 2025 as substantial new production comes online from the US, Brazil, Canada, and Guyana, which are collectively expected to add more than one million barrels a day.
Bank of America, in its energy outlook report last week, said that macro fundamentals suggest markets in 2025 will be oversupplied for oil. The bank expects this oversupply to drive Brent to an average of $65 a barrel next year, down from around $80 so far this year. It predicts WTI at $61 a barrel in 2025.
“Looking ahead, a significant supply surplus is projected for 2025, driven by non-Opec supply growth outpacing weak demand,” Mr Abuagla said.
“The market is likely to remain oversupplied. This further reinforces a bearish medium-term outlook for crude oil prices, with the market struggling to maintain upside momentum unless demand conditions improve.”
Furthermore, the US Federal Reserve’s rate decisions may affect market sentiment and could weigh on oil prices if interest rates remain high for longer, he said.
Markets widely anticipate the Federal Reserve to cut US interest rates this month, with officials' concerns on inflation expected to affect the pace of reducing policy next year.
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A total of 111,084 people applied for asylum in the UK in the year to June 2025, the highest number for any 12-month period since current records began in 2001.
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Zakat: an Arabic word meaning ‘to cleanse’ or ‘purification’.
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Zakat Al Mal: the ‘cleansing’ of wealth, as one of the five pillars of Islam; a spiritual duty for all Muslims meeting the ‘nisab’ wealth criteria in a lunar year, to pay 2.5 per cent of their wealth in alms to the deserving and needy.
Zakat Al Fitr: a donation to charity given during Ramadan, before Eid Al Fitr, in the form of food. Every adult Muslim who possesses food in excess of the needs of themselves and their family must pay two qadahs (an old measure just over 2 kilograms) of flour, wheat, barley or rice from each person in a household, as a minimum.
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