By Florence Tan and Siyi Liu
SINGAPORE (Reuters) – Oil prices rose on Friday, heading for their first weekly increase since the end of November, as additional sanctions imposed on Iran and Russia stoked supply concerns, while expectations of a surplus weighed on markets.
Futures rose five cents to $73.46 a barrel by 0716 GMT, while US West Texas Intermediate crude rose eight cents to $70.1 a barrel.
Both contracts are heading towards a weekly gain of more than 3% amid concerns about supply disruptions due to tightening sanctions on Russia and Iran, and hopes that Chinese stimulus measures will raise demand in support prices for the world's No. 2 oil consumers.
The recent stabilization came after oil defended a key technical level at $71, said Yip Jun Rong, market strategist at IG.
“But there is not enough conviction to prompt a stronger price recovery yet,” he added.
Chinese data this week showed that crude oil imports grew year-on-year for the first time in seven months in November, driven by lower prices and inventories.
“We've seen some recovery in refinery margins since the lows in September, but I don't think that's anything that justifies November crude import volumes,” said Warren Patterson, head of commodities research at ING.
Crude oil imports from the world's largest importer are set to remain high until early 2025, as refiners choose to increase supplies from Saudi Arabia, the world's largest exporter, hurt by falling prices, while independent refiners rush to use their quota.
The International Energy Agency said in its monthly report on the oil market that it raised its forecast for the growth of global oil demand in 2025 to 1.1 million barrels per day from 990,000 barrels per day last month, thanks to the stimulus measures taken by China recently.
But it expects to achieve a surplus next year, as non-OPEC+ countries are scheduled to boost supplies by about 1.5 million barrels per day, driven by Argentina, Brazil, Canada, Guyana and the United States.
“I think with expectations of a fairly comfortable balance (there is) good reason (for prices) to break out of that range at the moment,” ING's Patterson said.
Three of Canada's largest oil producers expect production to rise in 2025. Based on record US production, Goldman Sachs expects shale oil production to grow by 600,000 barrels per day in 2025, although growth could slow if Brent crude falls to… Below $70 per barrel.
Investors are also betting that the Fed will cut borrowing costs next week and follow up with more cuts next year, after economic data showed weekly claims for unemployment insurance rose unexpectedly.
