Today’s markets analysis on behalf of George Pavel General Manager at Naga.com Middle East
6th January 2025
Crude oil futures slightly retreated but continue to hold at their highest levels since October, supported by colder weather in the Northern Hemisphere and China’s economic stimulus measures. Brent crude and U.S. WTI crude both saw modest declines, yet the outlook remains bullish as colder temperatures are expected to increase demand for heating oil. Beijing’s fiscal stimulus aims to rejuvenate economic activity and consumer demand, further contributing to fuel consumption expectations. This economic support from China could help sustain global demand for crude, providing upward pressure on prices.
On the supply side, concerns are mounting over potential declines in Iranian oil production due to anticipated sanctions and policy changes under the incoming U.S. administration. Forecasts point to a reduction of 300,000 barrels per day in Iranian output by the second quarter of 2025, which would weigh on global supply and further support prices. Moreover, the U.S. oil rig count has decreased, indicating a potential slowdown in future output. With supply-side constraints contributing to tightening global inventories, this situation is likely to reinforce the current market optimism, supporting crude prices at elevated levels. Combined with the growing demand driven by weather and economic factors, these supply dynamics point to a favourable environment for oil prices in the near term.