DTN Oil Update
Oil Futures Accumulate Losses on Weak Demand Concerns
HOUSTON (DTN) -- Crude oil futures continued recording losses on Friday morning on expectations of weak demand, driven by China, and concerns about increasing inflationary pressures in the U.S. economy next year.
At 8:06 a.m. EST, front-month NYMEX WTI futures dropped $0.32 to $69.06 bbl and February Brent crude contract fell $0.33 to $72.55. ULSD futures for January delivery fell $0.0164 to $2.2213 gallon and January RBOB futures dropped $0.0008 to $1.9220 gallon.
In the opposite direction, the U.S. Dollar Index strengthened against a basket of foreign currencies at 108.19, an increase of 0.27% from Thursday.
The oil market is moving lower towards the end of the year on expectations of abundant supplies and sluggish global demand recently announced by OPEC and the International Energy Agency in two separate reports.
"Non-OPEC oil production growth alone, projected at around 1.5 million bpd, is set to outpace global demand growth next year, leading to a potentially oversupplied market. Barring major unplanned supply outages, we are facing the risk of global inventory builds from Q2 onwards, " DTN Analyst Karim Bastati said.
Analysts also expect weak demand from China will continue next year, despite top leaders pledging to implement a more active fiscal policy and a moderate monetary policy in 2025 as part of last week's stimulus package to boost the Chinese economy.
Domestically, the confirmation from the Federal Reserve that U.S. inflation will remain above its 2% target has raised concerns about the inflationary pressure on the U.S. economy in 2024.
The upcoming Trump administration is expected to impose trade tariffs against China and its two main commercial partners, Mexico and Canada, starting next year, which could also translate into higher prices for consumers.
On Dec. 18, the Federal Reserve anticipated a range for the federal funds rate of 4.25%-4.50% next year and maintained its forecast of 4.4% inflation for this year.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
