Oil Prices Rise as Glut Concerns Dwindle: Implications for Investors and Businesses in Oman
Oil Prices Rise Amid Easing Oversupply Concerns
TOKYO/BEIJING: Oil prices experienced an uptick on Thursday as concerns about oversupply diminished, following a prior session that saw prices hit two-week lows due to weakening demand.
At 0753 GMT, Brent crude futures rose by 24 cents, or 0.38%, reaching $63.76 per barrel. Meanwhile, US West Texas Intermediate futures increased by 25 cents, or 0.42%, to $59.85.
In October, global oil prices declined for the third consecutive month, plagued by fears of oversaturation in the market as the Organization of the Petroleum Exporting Countries (OPEC) and its allies ramped up production, alongside rising output from non-OPEC producers.
A shift in market sentiment emerged at the end of October, influenced by sanctions imposed by the US and UK on Russia’s largest oil companies, which tempered the previously aggressive bearish outlook, according to Haitong Securities.
Additionally, OPEC+’s decision to halt further production increases in the first quarter of next year has also helped calm oversupply anxieties.
Despite this easing of concerns, demand remains a critical issue. From the start of the year through November 4, global oil demand has increased by 850,000 barrels per day, which falls short of the 900,000 bpd growth initially forecasted by J.P. Morgan, as noted in a recent client brief.
The report highlighted that high-frequency indicators point to subdued US oil consumption, citing diminished travel activity and reduced container shipments as contributing factors.
In the previous trading session, oil prices fell following a report from the US Energy Information Administration, which revealed a 5.2 million barrel increase in US crude stockpiles, reaching 421.2 million barrels last week, contrary to expectations of a 603,000-barrel increase.
Capital Economics projected continued downward pressure on oil prices, maintaining a conservative outlook of $60 per barrel by the end of 2025 and $50 per barrel by the close of 2026.
In response to a well-supplied market, Saudi Arabia, the world’s leading oil exporter, significantly reduced the prices of its crude for Asian buyers in December, as OPEC+ producers continue to boost production.
Special Analysis by Omanet | Navigate Oman’s Market
The recent fluctuations in global oil prices signal increased uncertainty for businesses in Oman, particularly those reliant on oil revenues. Opportunities may lie in diversification, as the need for alternative energy sources and new market strategies becomes more pressing. Smart investors should consider hedging against volatility while exploring emerging sectors that can thrive amid fluctuating oil prices.
