Written by Robert Harvey
LONDON (Reuters) – Oil prices were on track to end 2024 with losses for the second straight year on Tuesday, but remained steady during the day as data showing an expansion in Chinese manufacturing was balanced with Nigeria targeting a production increase next year.
Futures fell seven cents, or 0.09 percent, to $73.92 a barrel by 1306 GMT. US West Texas Intermediate crude lost four cents, or 0.06%, to $70.95 a barrel.
At those levels, Brent crude was down about 4% from its final 2023 closing price of $77.04, while WTI was down about 1% from its settlement price on December 29 last year of $71.65.
In September, Brent crude futures closed below $70 per barrel for the first time since December 2021, while the 2024 closing high of $91.17 is also the lowest since 2021, as the post-pandemic demand rebound and price shocks from Russia take their toll. The 2022 invasion of Ukraine is starting to wind down.
Oil prices are likely to remain tied near $70 a barrel in 2025 as weak demand from China and rising global supplies are expected to overshadow OPEC+-led efforts to support the market, a monthly Reuters poll showed on Tuesday.
Weak demand forecasts in China in particular forced both the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) to lower their forecasts for oil demand growth for 2024 and 2025.
With non-OPEC supplies also rising, the IEA sees the oil market entering a state of surplus in 2025, even after OPEC and its allies delayed their plan to start increasing production until April 2025 against the backdrop of falling prices.
Investors will also be watching the Fed's interest rate cut expectations for 2025 after the central bank's policymakers earlier this month forecast a slower path due to stubbornly high inflation.
Low interest rates generally stimulate borrowing and stimulate growth, which in turn is expected to boost demand for oil.
Markets are also bracing for US President-elect Donald Trump's policies of looser regulations, tax cuts, higher tariffs, and tighter immigration, as well as potential geopolitical shifts from Trump's calls for an immediate ceasefire in the Russia-Ukraine war, as well as potential geopolitical shifts. The possibility of re-imposing the so-called “maximum pressure” policy on Iran.
Prices received support on Tuesday from data showing manufacturing activity in China grew for the third straight month in December but at a slower pace, suggesting that a raft of new stimulus is helping to support the world's second-largest economy.
But this is offset by the possibility of increased supplies next year, as Nigeria said it is targeting a national production of three million barrels per day next year, up from its current level of about 1.8 million barrels per day.
