Investing.com– Oil prices settled lower Friday, suffering a weekly loss as worries about waning Chinese demand and a bigger-than-expected build in U.S. inventories weighed.
At 2.30 p.m. ET (1930 GMT), fell 2.1% to $71.04 a barrel and fell 2.5% to settle $67.02 barrel.
Oil suffers big weekly loss
Both contracts are set to post weekly falls of over 4%, with losses initially sparked by unimpressive stimulus measures from China, especially as Beijing declined to dole out more targeted fiscal measures to support private spending and the property market.
The Organization of Petroleum Exporting Countries also cut its 2024 demand outlook for a fourth consecutive month, citing concerns over China.
Sentiment towards China was also strained by the prospect of a renewed trade war with the U.S., as Donald Trump won the 2024 presidential election. Trump has vowed to impose steep trade tariffs on the country.
US inventories grow in past week, but product stockpiles fall
US government data, released on Thursday, showed that U.S. grew nearly 2.1 million barrels (mb) in the week to Nov. 8, more than expectations for a 0.4 mb build and a second straight week of outsized build.
The reading pushed up concerns over a U.S. supply glut, especially as production remained close to record highs of over 13 million barrels per day. Production is also expected to increase in a Trump presidency.
But outsized draws in and inventories showed that demand in the world’s largest fuel consumer still remained robust, although this trend is also expected to shift with the upcoming winter season.
IEA raises 2024 demand outlook, warns of 2025 supply glut
The on Thursday slightly raised its 2024 demand growth forecast to 920,00 bpd, seeing stronger gasoil demand in some parts of the world.
The agency left its 2025 demand outlook unchanged, but warned that robust production will see oil supplies exceed demand in 2025, even if the OPEC left its ongoing supply cuts in place.
The IEA’s forecast comes after the OPEC cut its annual demand outlook earlier this week.
UBS cuts 2025 forecast, but sees potential upside
UBS cut its Brent crude price target to $80/bbl in 2025, down from $87/bbl at the end of March and June and $85/bbl at the end of September.
However, the bank’s analysts continue to believe that oil market participants are pricing in a too pessimistic outlook for 2025.
“Despite the re-election of Donald Trump and his pro-drilling pledge, we believe that it is not the person sitting in the White House that determines the US crude production path, but the prevailing spot price. With the US crude price starting to trade into the production curve, US crude production could be flat or even negative next year if current prices prevail,” analysts at UBS said, in a note dated Nov. 14.
“Moreover, energy executives have indicated an ongoing focus on capital discipline.”
Tariffs remain a risk for oil demand growth in 2025, but further rate cuts and fiscal stimulus measures would likely offset the associated economic growth drags.
“We see the oil market as balanced to marginally oversupplied next year. With low positioning of financial investors due to their view of a strongly oversupplied market, we believe oil prices have room to recover from current levels,” UBS added.
(Peter Nurse, Ambar Warrick contributed to this article.)