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OIL: Oil Outlook Still Bearish, Gains Corrective

OIL
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Oil prices were higher on Friday supported by the fifth consecutive EIA-reported US crude drawdown and light volumes ahead of year end, which are likely to continue this week. Crude has been range trading for a number of months as various influences offset each other leaving benchmarks little changed in 2024. Geopolitical threats to oil supply persist, while the market continues to worry about a significant surplus in 2025. 

  • WTI rose 0.9% to $70.26/bbl after reaching $70.75 and is now up 3.8% this month but only 1% on the year. Recent gains continue to be seen as corrective with initial support at $66.01 and resistance at $71.97.
  • Brent is 1% higher at $74.17/bbl following a high of $74.29. It is up 3% in December but down 0.5% in 2024. The technical outlook remains bearish with initial resistance at $75.79 and support at $69.95.
  • Conflict in the Middle East has continued with Israel now focussing on the Iran-backed Houthi rebels in Yemen who have been targeting international shipping in the key Red Sea route.
  • The strength of China’s oil demand has worried markets and while there is some optimism that increased stimulus in 2025 may boost it, the lack of details limited the upside to oil prices. US exports of crude to China fell 46% in 2024, according to Kpler, due to weak demand but also China shifting to other sources such as Iran and Russia. 
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Oil prices were higher on Friday supported by the fifth consecutive EIA-reported US crude drawdown and light volumes ahead of year end, which are likely to continue this week. Crude has been range trading for a number of months as various influences offset each other leaving benchmarks little changed in 2024. Geopolitical threats to oil supply persist, while the market continues to worry about a significant surplus in 2025. 

  • WTI rose 0.9% to $70.26/bbl after reaching $70.75 and is now up 3.8% this month but only 1% on the year. Recent gains continue to be seen as corrective with initial support at $66.01 and resistance at $71.97.
  • Brent is 1% higher at $74.17/bbl following a high of $74.29. It is up 3% in December but down 0.5% in 2024. The technical outlook remains bearish with initial resistance at $75.79 and support at $69.95.
  • Conflict in the Middle East has continued with Israel now focussing on the Iran-backed Houthi rebels in Yemen who have been targeting international shipping in the key Red Sea route.
  • The strength of China’s oil demand has worried markets and while there is some optimism that increased stimulus in 2025 may boost it, the lack of details limited the upside to oil prices. US exports of crude to China fell 46% in 2024, according to Kpler, due to weak demand but also China shifting to other sources such as Iran and Russia.