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(Bloomberg) — Oil steadied neared its lowest level this month, with the outlook for demand in focus after OPEC cut projections again on China’s slowdown.
West Texas Intermediate traded near $68 a barrel after ending little changed on Tuesday, with Brent closing below $72. OPEC shaved its demand-growth forecasts for a fourth consecutive month, yet the cartel remains more bullish than other market watchers, with many analysts warning of a glut next year.
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Crude has traded in a relatively tight range since the middle of last month, with traders tracking trends in Chinese consumption, tensions in the Middle East, and the implications of Donald Trump’s re-election to the Oval Office. After the monthly report from OPEC, the US will issue its short-term outlook later Wednesday, followed by the International Energy Agency’s view on Thursday.
Reflecting the bearish outlook, timespreads have weakened in recent sessions. While they remain in a backwardated structure — with nearby contracts at a premium to longer-dated ones — the gap has narrowed. Among the most notable is WTI’s prompt spread, which hit the lowest since February earlier this week.
“The oil market appears to be heading for a sizeable surplus in 2025, driven by a combination of decelerating oil demand growth, still-robust non-OPEC supply growth, and OPEC’s ambition to start growing supply as well,” Morgan Stanley analysts including Martijn Rats said in a report. The bank cut its Brent forecasts, with the first-quarter 2025 outlook reduced by $5.50 to $72 a barrel.
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