Oil prices hold steady as concerns over weak demand counterbalance supply risks from sanctions
Oil prices remained relatively stable on Thursday as concerns over weak demand and a larger-than-expected rise in U.S. gasoline and distillate inventories offset gains driven by additional EU sanctions threatening Russian oil supplies.
Brent crude futures edged up 31 cents to $73.83 per barrel , while U.S. West Texas Intermediate (WTI) crude futures gained 22 cents to $70.51. Both benchmarks had climbed by more than $1 on Wednesday.
OPEC recently cut its demand growth forecast for 2025 for the fifth consecutive month, marking the largest downward revision yet. Analysts at ANZ noted that investors will closely watch the International Energy Agency’s (IEA) updated market balance estimates, reflecting OPEC’s outlook.
In the United States, the world’s largest oil consumer, the Energy Information Administration (EIA) reported a higher-than-expected rise in gasoline and distillate inventories last week. Weak demand, particularly in top importer China, coupled with non-OPEC+ supply growth, contributed to market pressures.
Despite this, Beijing’s announcement of plans to adopt an “appropriately loose” monetary policy in 2025 has fueled expectations of increased Chinese demand. Chinese crude imports rose annually in November for the first time in seven months, up more than 14% compared to the same period last year.
Analysts at JPMorgan noted that global oil demand growth remained resilient this month, although it slowed slightly due to reduced jet fuel consumption in several regions.
On Wednesday, oil prices gained after the European Union introduced a 15th sanctions package targeting Russia, focusing on the “shadow fleet” of ships aiding Moscow in circumventing the G7’s $60 per barrel price cap.
Meanwhile, the Kremlin criticized potential U.S. sanctions tightening, suggesting it reflects the Biden administration’s intention to leave a challenging legacy for U.S.-Russia relations. Treasury Secretary Janet Yellen indicated that the U.S. continues exploring innovative measures to reduce Russia’s oil revenues, capitalizing on lower global demand to enhance sanctions.
Investors are now turning their attention to next week’s U.S. Federal Reserve meeting for potential cues on interest rate cuts, which could influence the oil market.
