Crude Oil Prices Start the Last Week of 2024 with Modest Gains

Crude oil prices began the final week of 2024 with modest gains, fueled by anticipation of key economic reports from China and the United States. However, prices quickly returned to their previous levels, maintaining stability as the year draws to a close. At the time of writing, Brent crude was trading at $74.00 per barrel, and West Texas Intermediate (WTI) was priced at $70.42 per barrel. Both benchmarks were only slightly down from Friday’s close, and it looks like they will end the year close to where they began, with Brent crude expected to experience a more noticeable decline than WTI—roughly $3 per barrel.

The week’s weak price movement follows a period of optimism regarding China's oil demand, despite bearish forecasts from Chinese oil giants CNPC and Sinopec. Both companies expect China’s oil demand to peak soon, which has cast a shadow over the market. However, the global demand for oil has continued to grow, keeping prices relatively stable.

According to Ryan Fitzmaurice, senior commodity strategist at Marex, global oil consumption hit an all-time high in 2024, even with China's demand underperforming expectations. He also noted that oil stockpiles are entering 2025 at relatively low levels, signaling tight supply heading into the new year. Fitzmaurice remains optimistic about the outlook for oil demand, forecasting that China’s economic data will improve in 2025 as recent stimulus measures take hold. Additionally, lower rates in the U.S. and other countries should further support oil consumption.

While optimism surrounds demand, supply risks are also a growing concern. Rapidan Energy highlighted increased risks in the Middle East, particularly with tensions involving the Houthis, who have threatened Saudi Arabia. As Bob McNally, president of Rapidan Energy, explained, while earlier phases of the Israel-Hamas conflict did not directly threaten oil supplies, the current phase involving the Houthis could pose a more significant risk to global oil production.

As the year draws to a close, oil market participants are bracing for more volatility, with demand concerns counterbalanced by supply risks in critical regions.