Oil prices fall amid Fed's hawkish stance and demand concerns
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Oil prices slipped in Asian trading Thursday as concerns over slower economic growth dampened demand prospects following the Federal Reserve’s signal of a cautious rate-cutting path for 2025. Brent crude fell 0.4% to $73.12, while WTI dipped 0.6% to $70.19, reversing Wednesday’s gains fueled by a U.S. crude stock draw.
Fed Outlook and Demand Worries Weigh on Oil
The Federal Reserve’s decision to reduce rates by 25 basis points, coupled with projections for just two rate cuts in 2025, sparked concerns over economic growth and fuel demand. With inflation risks persisting, the Fed’s cautious tone implies tighter liquidity conditions, potentially capping oil demand.
Supply-Demand Imbalance in Focus
Global Demand Below Forecasts:
Analysts highlighted a shortfall in global oil demand growth for December, down 700,000 barrels per day (bpd) compared to forecasts, and 200,000 bpd below expectations for the year-to-date.
Surplus Risks Persist:
DBS Bank’s Suvro Sarkar noted:
"The demand-supply balance for 2025 remains unfavorable. Even with OPEC+ withholding production, a market surplus could persist." Inventory Data Offers Mixed Signals The Energy Information Administration (EIA) reported a 934,000-barrel draw in U.S. crude stocks for the week ending December 13, falling short of analyst expectations for a 1.6 million-barrel draw. However, rising crude exports—up 1.8 million bpd to 4.89 million bpd—provided some support to prices.
Market Outlook: Key Levels to Watch
Brent Crude: Support at $72.50, with resistance near $74.50.
WTI Crude: Support at $69.50, with resistance near $71.50.
Market Call:
Oil’s short-term trajectory hinges on demand signals and broader economic data. With the Fed’s cautious outlook limiting growth expectations, oil may remain under pressure unless supply constraints from OPEC+ or stronger-than-anticipated demand growth provide support. Traders should monitor upcoming U.S. economic releases and OPEC+ updates closely for directional clarity.
Fed Outlook and Demand Worries Weigh on Oil
The Federal Reserve’s decision to reduce rates by 25 basis points, coupled with projections for just two rate cuts in 2025, sparked concerns over economic growth and fuel demand. With inflation risks persisting, the Fed’s cautious tone implies tighter liquidity conditions, potentially capping oil demand.
Supply-Demand Imbalance in Focus
Global Demand Below Forecasts:
Analysts highlighted a shortfall in global oil demand growth for December, down 700,000 barrels per day (bpd) compared to forecasts, and 200,000 bpd below expectations for the year-to-date.
Surplus Risks Persist:
DBS Bank’s Suvro Sarkar noted:
"The demand-supply balance for 2025 remains unfavorable. Even with OPEC+ withholding production, a market surplus could persist." Inventory Data Offers Mixed Signals The Energy Information Administration (EIA) reported a 934,000-barrel draw in U.S. crude stocks for the week ending December 13, falling short of analyst expectations for a 1.6 million-barrel draw. However, rising crude exports—up 1.8 million bpd to 4.89 million bpd—provided some support to prices.
Market Outlook: Key Levels to Watch
Brent Crude: Support at $72.50, with resistance near $74.50.
WTI Crude: Support at $69.50, with resistance near $71.50.
Market Call:
Oil’s short-term trajectory hinges on demand signals and broader economic data. With the Fed’s cautious outlook limiting growth expectations, oil may remain under pressure unless supply constraints from OPEC+ or stronger-than-anticipated demand growth provide support. Traders should monitor upcoming U.S. economic releases and OPEC+ updates closely for directional clarity.