Oil prices near $70 as supply surplus looms in 2025
WTI and Brent crude trade near $70 as surplus looms
The global oil market is bracing for a surplus in 2025, with supply expected to exceed demand by nearly 1 million barrels per day (bpd). This imbalance arises from increasing production by non-OPEC+ countries, including the United States, Brazil, and Guyana, and modest demand growth, particularly in China.
Analysts predict that President-elect Donald Trump’s pro-oil policies, including deregulation and faster permitting, could further bolster U.S. crude production, intensifying the oversupply.Despite OPEC+ delaying the easing of its 2.2 million bpd cuts to April 2025, the International Energy Agency (IEA) forecasts a surplus of 950,000 bpd even if current production levels are maintained. Should OPEC+ proceed with its planned cuts reduction, the glut could grow to 1.4 million bpd.
USOIL price dynamics (Nov 2024 - Dec 2024) Source: TradingView.
WTI and Brent oil price dynamics
West Texas Intermediate (WTI) crude is trading at $70.69, holding above its 50-day ($69.99) and 200-day ($69.62) exponential moving averages (EMAs), signaling short-term strength. Immediate resistance lies at $71.38, while support is found at $68.77. A drop below the pivot point of $70.03 could lead to sharper declines.
Similarly, Brent crude is trading at $73.73, with its pivot point at $73.34 serving as a critical marker. Resistance levels are positioned at $73.99 and $74.54, while support is identified at $72.73 and $71.98. Brent’s tight range reflects market indecision, with traders awaiting a breakout for clearer direction.
Geopolitical risks and demand uncertainty
Geopolitical factors, including Trump’s policies toward Iran, Venezuela, and Russia, could disrupt the current supply-demand balance. Stricter sanctions or increased tensions may drive oil prices higher, offsetting bearish fundamentals. However, with China’s 2024 oil demand growth estimates revised downward from 700,000 bpd to 180,000 bpd, demand recovery remains uncertain.
Looking ahead, market participants are closely watching OPEC+ decisions, Trump’s energy policies, and global economic conditions to gauge oil price trends.
Previously, we analyzed how robust U.S. demand and China's economic recovery contributed to a bullish momentum in oil prices.
