Today’s markets analysis on behalf of George Pavel General Manager at Naga.com Middle East
19th December 2024
Crude oil futures were volatile following the U.S. Federal Reserve’s indication that it would slow the pace of interest rate cuts in 2025. This development raised concerns about potential economic slowdown and reduced demand for fuel, which could weigh on global crude prices. While U.S. crude stocks had fallen and the Fed had reduced interest rates by 25 basis points as expected, the central bank’s projections for fewer rate cuts in 2025, driven by inflation concerns, exerted additional pressure on market sentiment, limiting upward momentum in global crude prices.
The market exhibits cautious sentiment regarding the demand outlook for 2025, amid concerns over an unfavourable demand-supply balance and scepticism surrounding projections of significant demand growth. While U.S. crude stocks decreased by 934,000 barrels in the latest week, overall oil demand continues to underperform expectations, raising the likelihood of a market surplus despite OPEC+ production cuts. This situation may limit any substantial upward movement in global crude prices.