February 14, 2025 (Investorideas.com Newswire) Investorideas.com, a go-to platform for big investing ideas releases market commentary from Samer Hasn, Senior Market Analyst at XS.com
Crude oil prices are rebounding today by 0.5% for both Brent and WTI, continuing yesterday's rise while prices remain near this year's lows.
In light of the series of reports from major energy bodies that we have seen this week, we find that the problem is now more focused on the supply side than the demand side, as it was last year when concerns about China's crude consumption were the main negative factors for prices.
Global oil demand is expected to continue to grow through 2025 and 2026 overall. According to the US Energy Information Administration (EIA), demand will reach 104.1 million barrels per day in 2025 and 105.2 million barrels per day in 2026, while the Organization of the Petroleum Exporting Countries (OPEC) expects it to reach 105.1 million barrels per day in 2025 and 106.5 million barrels per day in 2026.
On the supply side, global oil production is expected to increase as a result of the easing of OPEC+ production cuts and the increase in production from non-member countries, such as the United States, Canada, Brazil and Guyana. The EIA also expects production to reach 104.6 million barrels per day in 2025 and 106.2 million barrels per day in 2026, while the IEA expects production to reach 104.5 million barrels per day in 2025.
The three agencies' reports this month reiterated that demand for crude from China will lead global demand growth, supported by government stimulus packages, the impact of which may continue to crystallize further, which may be the most important positive factor supporting crude prices. While increased production, especially from North America, and the easing of supply restrictions from OPEC+ countries will increase downward pressure on prices, the recently tightened sanctions on Russia and Iran are unlikely to have a significant impact on the market in the near term.
As a result of these factors, US crude prices may stabilize at $72 per barrel this year before declining to $66 per barrel next year, according to the EIA's forecast.
These forecasts will be subject to changes with the trade and geopolitical landscape primarily this year. Over the past few weeks, we have seen signs of the possibility of negotiations between the United States and China despite the beginning of the trade war and the exchange of escalatory measures between them, in addition to Donald Trump's hesitation in imposing mutual tariffs on other countries and suspending them with regard to Canada and Mexico.
The decline of this trade war may lead to a more positive outlook for demand for crude, especially from China, which may help prices recover. It is also worth noting that the EIA forecast is based on the assumption of a universal tariff of 10% on global imports to the United States and 30% on those coming from China, while the current policy is to impose only 10% on Chinese imports, while universal tariffs are still under study.
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