In December 2024, Brent and WTI crude oil prices showed modest fluctuations, with the ICE Brent front-month future ending the month around $73.58 per barrel and the NYMEX WTI near-month contract at $70.10 per barrel, reflecting modest gains of approximately 2.4% and 3.1%, respectively, from their November close levels.
EXECUTIVE SUMMARY
In December 2024, Brent and WTI crude oil prices showed modest fluctuations, with the ICE Brent front-month future ending the month around $73.58 per barrel and the NYMEX WTI near-month contract at $70.10 per barrel, reflecting modest gains of approximately 2.4% and 3.1%, respectively, from their November close levels. The month has been characterized by relatively tight trading ranges for both benchmarks, with Brent oscillating between $71.12 and $74.49 per barrel, and WTI ranging from $67.20 to $71.29 per barrel. The price movements were shaped by a blend of fundamental and geopolitical factors, leading to a largely range-bound performance. On the supply side, OPEC+ maintained its production cuts, providing a solid price floor, while U.S. crude inventory draws offered additional support. However, these bullish factors were tempered by broader concerns over weak global demand, particularly from China, where economic growth remains under scrutiny despite potential fiscal and monetary stimulus measures. The strong U.S. dollar, bolstered by the Federal Reserve's cautious approach to rate cuts, added further pressure on oil prices by making crude more expensive for holders of other currencies. Geopolitical developments also influenced market sentiment. Speculation about additional sanctions on Russian oil exports and heightened tensions in the Middle East provided intermittent support. However, these factors lacked significant impact on physical supply, limiting their ability to drive sustained price increases. Overall, both Brent and WTI crude prices remained constrained by technical resistance levels and a cautious market outlook, with supply-demand fundamentals and economic uncertainties continuing to play dominant roles in market dynamics.
As the market looks ahead to the start of the new year, crude oil prices are likely to remain range-bound, with Brent likely hovering between $72 and $76 per barrel and WTI trading between $69 and $73 per barrel in early January. And the market will continue to focus on macroeconomic data, inventory trends, and geopolitical developments for directional cues. A breakout beyond these ranges would likely require a substantial shift in demand expectations or a major disruption to supply. On the bullish side, demand is anticipated to receive a seasonal boost as industrial activity picks up post-holidays, while OPEC+ continues to enforce production cuts, ensuring supply discipline. Geopolitical uncertainties, particularly in the Middle East, could add to market volatility, as tensions involving Israel, Iran, and Yemen remain unresolved. Furthermore, any additional sanctions on Russian oil exports by the U.S. or its allies could tighten supply and lend support to prices. However, bearish pressures persist, particularly from the macroeconomic environment. China's economic recovery remains fragile, with doubts about the efficacy of its stimulus measures, while global economic growth is under pressure from tighter financial conditions. The U.S. dollar's strength, bolstered by the Federal Reserve's cautious stance on monetary easing, is expected to cap significant price rallies by increasing the relative cost of crude. Additionally, the International Energy Agency forecasts a global supply surplus in 2025, which could temper bullish sentiment as market participants weigh the potential for increased non-OPEC supply. Nevertheless, from a technical point of view, this prolonged albeit volatile consolidation on the crude oil market above key resistance levels of $70 and $65 per barrel for ICE Brent and NYMEX WTI, respectively, which has been continuing for the 4th straight month since September 2024, can somewhen result in a sharp and strong price movement, although the underlying factors now look to be balanced. In this regard, falling volatility in December may signal that this moment is now much closer to us than it seems, although we have no clues to which side this possible price action can be. Despite we keep our cautiously optimistic view on further crude oil prices perspectives in early 2025 based on too pessimistic global demand projection following several months of worsening forecast and still prefer to play long and buy dips on the crude oil market, we highly recommend to be cautious and not to fight against strong unfavorable market movements, using stop orders.
According to the International Energy Agency, global oil supply rose in November 2024 by 130 kbd on a monthly basis to 103.4 mbd, up 230 kbd year-on-year, on a continued recovery in Libyan and Kazakhstan output. The decision by OPEC+ to delay the unwinding of its additional voluntary production cuts by another three months and extend the ramp-up period by nine months through September 2026 has materially reduced the potential supply overhang that was set to emerge next year. Even so, persistent overproduction from some OPEC+ members, robust supply growth from non-OPEC+ countries and relatively modest global oil demand growth leaves the market looking comfortably supplied in 2025. So, total oil supply is on track to increase by 630 kbd this year and 1.9 mbd in 2025, to 104.8 mbd, even in the absence of unwinding of OPEC+ cuts. Exclude a return to higher production quotas, OPEC+ crude oil production may still rise next year if Libya, South Sudan and Sudan can sustain production and as Kazakhstan’s 260 kbd Tengiz expansion comes online. Globally, the bulk of supply growth will continue to be dominated by non-OPEC+ countries, with the US, Brazil, Canada, Guyana and Argentina adding more than 1.1 mbd of crude oil and NGL output between them.
According to the U.S. Energy Information Administration, global oil production demonstrated a notable upward trajectory in November 2024 as well. The total output saw a rise of 0.71 mbd compared to the prior month, marking a 0.7% MoM increase. This recent improvement extending a two-month streak of sequential growth, pushing the production to its new all-time high of 103.5 mbd. On a year-over-year basis, the global oil supply expanded in November 2024 by 0.38 mbd from the same period in the previous year, representing a modest 0.4% YoY growth. When measured against the five-year historical average for November, the output exceeded expectations by a substantial 3.86 mbd, a 3.9% divergence that highlights the robustness of reported production levels in the global oil landscape.
OPEC total crude oil production in November 2024 exhibited a moderate increase on a month-over-month basis, with the output rising by 122 kbd, according to the cartel’s own data, representing a 0.5% MoM uptick. This growth marked the second consecutive month of production gains and brought the output to its highest level in 4 months. However, when compared to November 2023, total OPEC crude output was down by a significant 1.18 mbd, equating to a 4.2% YoY decline. Notably, this decline extended a prolonged downward trajectory in annual comparisons, which has persisted for 20 consecutive months. Nevertheless, the pace of annual reduction has begun to slow, with November's rate of contraction being the smallest recorded in the last three months. In the context of historical benchmarks, OPEC’s November output also lagged behind its five-year average for the same month. The production level fell short by 1.07 mbd, representing a 3.9% deficit.
In early December 2024, OPEC+ held its semi-annual meeting to address oil production strategies amid evolving market dynamics. A key outcome was the postponement of planned output increases until April 2025, deferring the initial schedule by several months. The postponement was the third since September 2024 and came against a backdrop of heightened geopolitical tensions that have raised potential supply risks and slowing global oil demand growth. The cuts will now, at the earliest, be phased out from the end of March 2025 through September 2026. Additionally, the alliance extended existing production cuts through the end of 2026, a year longer than previously agreed. These decisions reflect OPEC+'s cautious approach to managing oil supply in response to global economic uncertainties and shifting demand forecasts. Notably, OPEC recently reduced its oil demand growth projections for 2024 and 2025, citing economic challenges in key markets such as China and India. The extended production cuts involve significant contributions from major oil producers, including Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman. These nations have committed to maintaining additional voluntary adjustments totaling 1.65 million barrels per day until the end of December 2026.
The IEA again estimated OPEC total crude oil production in November 2024 considerably higher than the cartel itself, providing the figure of 27.21 mbd which was 553 kbd higher than the one reported by the OPEC, representing a relative difference of +2.1%. Meantime, the EIA's estimate of 26.61 mbd was closer to OPEC's one, with an absolute difference of just -52 kbd, or -0.2% in relative terms. While the IEA consistently showed a pronounced overestimation of total OPEC crude oil output relative to the cartel’s own assessment, the EIA this time printed a slightly lower number, by contrast to the prior month. However, November 2024 became the 5th month over the recent half year when the EIA providing more conservative estimates of OPEC total crude supply.
Non-OPEC total oil production in November 2024 witnessed a significant rise, marking a notable milestone in its historical trajectory. The overall output increased by 0.69 million barrels per day (mbd) compared to the preceding month, translating into a robust 1.0% MoM relative growth. This surge not only represented the fastest monthly increase in the last 9 months, but also resulted in the new highest production level over the history. On an annual basis, the total output rose by 0.31 mbd, reflecting a more moderate 0.4% YoY increase, sustaining a remarkable upward trajectory that has persisted for 43 consecutive months (3.5 years). Furthermore, when juxtaposed with the five-year average for November, the reported level of oil production in the non-OPEC group stood 3.92 mbd higher, showcasing a 5.8% expansion, once again confirming the leading role of non-OPEC oil producers in increasing the global output in post-pandemic times.
The United States recorded a notable upward shift in its total oil production in November 2024, with a 195 kbd increase compared to the previous month, reflecting a 0.9% MoM growth. This increase pushed total oil output in the country to a new record of 23.08 mbd, being the first month in history when it risen above the threshold of 23.0 mbd. The growth also continued a positive month-over-month trend in output for the second consecutive month. On a year-over-year basis, the supply rose by 387 kbd, or +1.7% YoY, reflecting the fastest rate of annual growth over the past three months. The reported production for the month also surpassed the five-year average for November by 2.48 mbd, a robust 12.1% higher than typical production levels for this period. The U.S. oil production in November 2024 was characterized by broad-based growth across all major segments, with notable contributions from crude oil, NGLs, and renewable fuels. The marked increases in both monthly and yearly production figures underline the ongoing strength of U.S. energy output, reflecting both recovery and expansion in domestic oil and gas activity.
U.S. shale oil output showed only a marginal increase within the month, rising by just 2 kbd from the level of October 2024. Albeit this represented a subtle relative change of less than +0.1% MoM, the increase marked the new highest level of shale oil production in the U.S. over the history. Technically, the production of shale oil continued its gradual upward trend, having risen for 4 consecutive months, although the growth rate slowed to its minimal observed in the last 4 months. On a year-over-year basis, shale oil production in the country exhibited a much more pronounced 454 kbd increase, reflecting a solid 4.5% YoY gain compared to the same period in 2023. Although this was also the slowest rate of annual growth, albeit over the past 8 months, it continued an upward trajectory for the 43rd month in a row. Moreover, the output of shale oil significantly outpaced the five-year average for November by 1.45 mbd, or +15.9%, highlighting the continued expansion in shale production in the United States despite the slowing growth rate.
The International Energy Agency referred to global oil demand dynamic as the most important question for 2025, although the market is closely assessing ongoing geopolitical tensions and evolving OPEC+ supply dynamics. The abrupt halt to Chinese oil demand growth this year – along with sharply lower increases in other notable emerging and developing economies such as Nigeria, Pakistan, Indonesia, South Africa and Argentina – has tilted consensus towards a softer outlook. In a break from recent trends, non-OECD total oil demand in 3Q24 was up only 320 thousand barrels per day (kbd) year-over-year, its lowest quarterly growth rate since the height of the pandemic, while OECD countries posted an annual increase of 190 kbd in the same quarter. According to the agency, world oil demand growth is set to accelerate only modestly from 840 kbd in 2024 to 1.1 million barrels per day (mbd) next year, lifting consumption to 103.9 mbd in 2025. Increases in both years will be dominated by petrochemical feedstocks, while demand for transport fuels will continue to be constrained by behavioral and technological progress. While non-OECD demand growth, notably in China, has slowed markedly, emerging Asia will continue to lead gains in 2024 and 2025.
On the other hand, the U.S. Energy Information Administration reported a notable increase in global oil consumption in November 2024, which increased by 0.94 mbd compared to the preceding month. This 0.9% MoM growth marked the most accelerated pace in 5 months, reflecting a robust uptick in demand. On a year-over-year basis, total oil consumption around the world grew by 0.76 mbd, providing a 0.7% YoY increase relative to November 2023. Although this annual growth extended a positive trend that has persisted for 6 months, it represented the slowest rate of annual expansion in the last three months. Compared to the five-year average for November, global oil demand stood significantly higher in the month under report, exceeding historical norms by 3.85 mbd, or +3.9%. However, November 2024 underscored a strongly divergent dynamics between OECD and non-OECD countries. While advanced economies grappled with softening consumption, non-OECD nations continued to drive global demand higher, reinforcing their role as the primary engine of growth in the global oil market.
Global observed oil inventories drew by 39.3 million barrels (mb) in October 2024, according to the most recent data of the International Energy Agency. This drop was led by an exceptionally sharp decline in petroleum product stocks, which eroded by 82.3 mb, as low refinery activity coincided with a rise in global oil demand. In turn, OECD commercial oil stocks declined by 30.9 mb to 2 778 mb, 91.6 mb below their five-year average for this month of a year. Preliminary data for November show global inventories rebounded, led by oil on water and non-OECD crude oil.
As for September 2024, detailed data on which were released by the IEA, OECD total commercial oil inventories recorded a marginal contraction, declining by 2.7 million tons from the preceding month. This represents a 0.6% month-over-month reduction and positions the stockpiles at their lowest levels in half a year. On a year-over-year basis, the decline was less pronounced, with inventories falling by a mere 0.2 million tons compared to the same period in the prior year, equating to a less than 0.1% decline. Hence, this reduction marks the third consecutive month of a downward year-over-year trend, albeit at the slowest pace within this timeframe. However, when benchmarked against the 5-year average for September, the inventories undershot significantly, standing 41.5 million tons lower, a stark 8.2% decline, which underscores a persistent supply tightness.
U.S. total oil inventories experienced a notable contraction in November 2024 of 15.83 mb in compare to the previous month, marking a 1.0% MoM decrease. This reduction drove inventories to their lowest level in 6 months, extending a two-month downward trajectory. However, the year-over-year comparison offered a contrasting view as the total stockpiles were 8.87 mb higher than the same period in 2023, reflecting a modest 0.5% YoY growth. While this annual increase sustained a 7-month upward trend, it represented the slowest pace of year-over-year growth within this period. The broader perspective against the five-year average for this month of a year revealed even a sharper decline, with the total inventories falling 175.01 mb short, translating to a significant 9.7% deficit.
Breaking down the U.S. total inventories into their two primary components—the Strategic Petroleum Reserve and commercial stockpiles—highlights the divergence in their trajectories within the month. On the one hand, the SPR exhibited robust growth, adding 5.13 mb in November, translating into a 1.3% MoM increase. This uplift brought the volume of the SPR to its new highest point in over two years and underscored a 17-month streak of monthly gains. On the other hand, U.S. commercial oil inventories faced significant downward pressures in November 2024. The stockpiles recorded a sharp monthly decline of 20.95 mb, equating to a 1.7% MoM drop, reducing stock volumes to their lowest point in 8 months.
Crude oil inventories at Cushing, Oklahoma, also saw a notable contraction in November 2024, declining by 1.16 mb, or -4.6%, month-over-month. Despite to a certain buildup in stocks at Cushing recorded in October, the recent monthly drop became the 5th one over the recent half year, suggesting prolonged tightening of supply-demand balance on the U.S. domestic crude oil market. Year-over-year, the stocks fell by 3.53 mb, equivalent to a sharp 12.7% YoY decline, marking the steepest annual drop in 4 months and underscoring persistent tightening in inventory levels. Compared to the five-year average for November, the Cushing stocks also were 12.60 mb lower, a significant 34.3% deficit, reflecting reduced storage buffers and a strained market dynamic.
Total offshore oil inventories around the globe experienced a notable expansion in November 2024, according to the data provided by Vortexa, rising by 12.87 million barrels (mb) compared to the prior month. This marked an impressive 21.9% MoM increase, the fastest pace of growth recorded in the last 6 months, resulting in the highest inventory level seen in 4 months. However, on a year-over-year basis, the picture was less optimistic, with the global stocks declining by 14.33 mb, equating to a contraction of 16.7% YoY. This buildup extended a 14-month downward trend in annual comparisons, although the rate of decline was the slowest in the past 5 months. When benchmarked against the five-year historical average for November, the inventories also were 16.75 million barrels lower, reflecting a 19.0% deficit and underscoring the broader contraction of offshore oil stocks.
Comments