MW Oil prices fall as IEA sees global market 'comfortably supplied' next year

By Myra P. Saefong and Joseph Adinolfi

IEA also lowers its oil-demand growth forecast for 2024

Oil prices moved lower on Thursday, on track to end a three-session streak of gains, after the International Energy Agency lowered its global oil-demand growth estimate for this year and said the market looks "comfortably supplied" for 2025.

Prices had finished higher on Wednesday as talk of new curbs on Russian and Iranian supply helped lift the price of U.S.-traded crude above the key level of $70 a barrel.

Price moves

-- West Texas Intermediate crude CL00 for January delivery CL.1 CLF25 fell 96 cents, or 1.4%, to $69.33 a barrel on the New York Mercantile Exchange, after settling at its highest since Nov. 22 on Wednesday, according to Dow Jones Market Data.

-- February Brent crude BRN00 BRNG25, the global benchmark, declined by 78 cents, or 1.1%, to $72.74 a barrel on ICE Futures Europe.

-- January gasoline RBF25 shed 1% at $1.9658 a gallon, while January heating oil HOF25 lost 0.7% to $2.2071 a gallon.

-- Natural gas for January delivery NGF25 rose 1.6% to $3.433 per million British thermal units.

Market drivers

Recent gains for oil had been supported by sanctions talk, but prices turned lower after the Organization of the Petroleum Exporting Countries and the IEA this week published "mildly bearish monthly oil market reports," Ole Hansen, head of commodity strategy at Saxo Bank, told MarketWatch in emailed comments.

In its monthly report issued Thursday, the IEA said that "while the market is closely assessing ongoing geopolitical tensions and evolving OPEC+ supply dynamics, the bigger question for 2025 remains global oil demand."

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," it said.

Oil demand from countries outside the Organization for Economic Cooperation and Development in the third quarter was up only 320,000 barrels per day year over year - "its lowest quarterly growth rate since the height of the pandemic," the report said.

The IEA forecast oil demand growth of 840,000 bpd for this year, down 80,000 bpd from the estimate in last month's report, to 102.8 million bpd.

"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," the IEA said in its report.

The agency, however, forecast global oil demand growth of 1.1 million bpd, up 90,000 bpd from the previous month's estimate, to total 103.9 million bpd in 2025.

The IEA also said total global oil supply is set to increase by 1.9 million bpd in 2025 to 104.8 million bpd. Given the IEA's total global demand forecast of 103.9 million for 2025, that would imply a supply surplus of 900,000 bpd.

In its monthly report Wednesday, OPEC cut its forecasts for both 2024 and 2025 global oil demand growth.

Oil prices had climbed earlier this week after the European Union agreed to additional sanctions on Russia. Reports that the Biden administration might impose additional restrictions of its own also contributed to the rally.

Also on Wednesday, Mike Waltz, President-elect Donald Trump's pick for national security adviser, told Fox News that the incoming administration is planning a return of its maximum-pressure strategy against Iran.

In other energy-related news, the Energy Information Administration reported a larger-than-expected weekly fall in U.S. natural-gas supplies.

The government agency reported an inventory decline of 190 billion cubic feet for the week that ended Dec. 6. Analysts surveyed by S&P Global Commodity Insights expected a fall of 165 bcf, on average.

-Myra P. Saefong -Joseph Adinolfi

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December 12, 2024 11:13 ET (16:13 GMT)

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