Crude oil production will continue to outpace demand in 2025 despite OPEC+ caps on output, Kpler analyst Homayoun Falakshahi told Reuters.
In an interview from earlier today, the analyst noted the sluggish demand growth in China but also signs of weakening demand growth in the United States, which even the recent production outages in Libya could not offset, at least based on trader behavior.
Falakshahi noted the recent increases in gasoline and middle distillate inventories in the United States as bearish signals for oil prices, saying that summer is peak demand season in fuels and the recent increases go against expectations. It is worth noting, however, that summer season officially ends on Labor Day, which was this year September 2, so a decline in demand for fuels may well be within normal seasonal patterns.
On the other hand, the analyst said that oil prices are due for a correction due to the resilience of the physical markets. The rebound in prices would also be the result of traders catching up with the implications of OPEC's decision to postpone the rollback of its production cuts by two months. Still that last move can also be seen as bearish, suggesting that demand is not strong enough for more OPEC production to come into the market.
Meanwhile, prices rose on Thursday, driven higher by Hurricane Francine, with both Brent crude and West Texas Intermediate adding around 2% after offshore platforms in the Gulf of Mexico and refineries along the Gulf Coast were closed in anticipation of the hurricane's landfall.
"Both benchmarks, WTI and Brent, seem to have found some ground amid worries of disrupted U.S. oil supplies," Priyanka Sachdeva, senior market analyst at Phillip Nova, told Reuters. "The region accounts for about 15% of U.S. oil production, with any disruptions in production likely to tighten supplies in the near term."
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More