Oil prices dipped on Friday as rising global supply clashed with hopes for stronger demand from China’s economic stimulus. With higher production expected in 2024 and Chinese crude imports increasing, traders are watching key price levels and economic signals like a possible Federal Reserve rate cut.
Oil prices steady amid supply growth and Chinese stimulus hopes
Oil prices edged lower on Friday as markets weighed robust supply forecasts against potential demand growth fuelled by China’s recent economic measures.
According to the International Energy Agency (IEA), non-OPEC+ producers are set to increase output by 1.5 million barrels per day (bpd) in 2024, driven by countries such as the United States, Canada, Brazil, Guyana, and Argentina.
This supply surge is expected to outpace the 1.1 million bpd rise in demand, which the IEA links primarily to China’s economic stimulus initiatives.
Market performance and technical analysis
WTI crude ended the session at USD 69.618, after peaking at USD 70.693 and bottoming out at USD 69.083.
Meanwhile, Brent crude hovered around USD 73.33, reflecting a narrow trading range for both benchmarks.
Oil drifts after a pullback, with technical indicators pointing towards a more balanced and cautious trading environment, as seen on the VT Markets app.
On the technical side, the MACD indicator suggests a modest recovery from earlier bearish trends. The histogram is nearing zero, and the signal line indicates stabilisation.
Resistance is pegged at USD 70.693, with support at USD 69.083, suggesting consolidation within these levels for now.
Key drivers supporting prices
Despite projections of abundant supply, oil prices found support from tighter sanctions on Russia and Iran, alongside rising Chinese crude imports.
November marked the first annual increase in China’s crude imports in seven months, supported by lower prices and stockpiling by independent refiners.
This trend is expected to continue into 2025, particularly with Saudi Arabia offering discounted crude.
Future outlook
Goldman Sachs predicts US shale production will grow by 600,000 bpd by 2025, though lower Brent prices below USD 70 could slow this momentum.
Goldman Sachs analyst Alex Blostein discusses the tick-up in M&A activity and the outlook for financials in 2025: pic.twitter.com/8mKkBi18jV
Meanwhile, traders are eyeing a potential Federal Reserve rate cut next week, which may indirectly influence oil demand by shaping broader economic conditions.
With supply-side resilience and gradual recovery in Chinese demand, the market remains cautious.
The USD 70 resistance level will be a focal point, as traders look for signs of any upward breakout.
