London: Oil prices remained largely unchanged on Thursday, following earlier declines this week due to a stronger U.S. dollar and concerns over rising supply amid sluggish demand growth.
At 1203 GMT, Brent crude futures gained 17 cents, reaching $72.45 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 14 cents, settling at $68.57 per barrel.
U.S. Dollar Drives Price Volatility
Phillip Nova investment analyst Danish Lim noted that the U.S. dollar remains the primary driver of oil price movements in both the short term and long term. The recent rally of the dollar has exerted significant downward pressure on oil prices. Lim anticipates continued market volatility, with a bearish outlook for oil prices.
Dollar Surge and Economic Concerns
The U.S. dollar surged to a one-year high on Thursday, extending its gains from the previous day’s seven-month peak against major currencies. The rally followed the release of U.S. inflation data for October, which showed an increase in line with expectations, stoking concerns about slowing demand in the U.S. economy. OANDA senior market analyst Kelvin Wong noted that the combination of weak demand factors, including rising U.S. Treasury yields and inflation expectations, is dampening overall liquidity, which could reduce oil demand.
Oversupply Expected by 2025
The International Energy Agency (IEA) warned on Thursday that global oil supply will surpass demand in 2025, even if OPEC+ cuts remain in place. Rising production from the U.S. and other non-OPEC producers is expected to outpace sluggish demand growth. The IEA revised its 2024 global oil demand growth forecast upward by 60,000 barrels per day (bpd), while leaving its 2025 forecast largely unchanged at 990,000 bpd.
Independent market analyst Tina Teng pointed out that slowing demand in China has further weakened the supply-demand dynamics, with few factors supporting a bullish oil market.
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