Oil prices eased slightly after a brief rally, as traders weighed supply risks from Hurricane Rafael and potential policy changes under President-elect Trump. Adding to the pressure, China’s oil imports dropped, while US crude inventories rose, creating a mixed outlook for near-term prices.
Oil prices dipped modestly on Friday, with Brent crude futures decreasing by 0.6% to USD 75.16 per barrel, and US West Texas Intermediate (WTI) sliding 0.8% to USD 71.81.
This slight decline follows a near 1% rise on Thursday as traders watched developments in the Gulf of Mexico and anticipated potential policy changes under President-elect Donald Trump.
Prices briefly rallied to a resistance level around 72.853 before consolidating and pulling back to roughly 71.923.
Recent 5, 10, and 30-period moving averages point to a bullish trend, but they’re converging, which may signal short-term hesitation or consolidation.
Initially, Hurricane Rafael shut down 391,214 barrels of US crude production per day, raising concerns over potential supply disruptions.
However, the hurricane is expected to weaken over the weekend as it drifts westward, away from key oil-producing areas, which has eased concerns about US oil output.
The National Hurricane Centre’s forecast suggests a reduced impact on production, prompting a slight cooling in oil prices as traders adjust their outlook.
With Hurricane Rafael’s impact appearing limited, market attention has shifted to possible supply changes under the upcoming Trump administration.
Anticipated actions, such as stricter sanctions on oil-exporting nations like Iran and Venezuela, could tighten supply from these regions, lending support to oil prices over the medium term.
Although such policies are expected to be implemented gradually, they may contribute to supply constraints if enforced stringently.
BMI, a subsidiary of Fitch Solutions, notes that while Trump’s stance appears aggressive, institutional checks and moderate advisers may moderate drastic changes.
BMI’s forecast suggests a pragmatic approach, with limited direct impacts on oil supply fundamentals likely through 2025.
Additional downward pressure stems from China, the world’s largest oil importer, which reported a 9% drop in crude imports for October, marking the sixth straight month of year-on-year declines.
This trend raises questions about demand from a key market, potentially weighing on global oil prices if it continues.
Meanwhile, rising US crude inventories add further pressure on prices amid concerns about near-term demand strength.
Traders are expected to remain cautious, balancing expectations of tighter supply from potential US sanctions with mixed demand and inventory data.
Overall, the oil market faces a complex landscape where supply risks and geopolitical factors will significantly influence near-term price movements.
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