On Wednesday (December 4), US and European crude oil futures prices generally declined. The settlement price for West Texas Intermediate (WTI) January 2025 futures on the New York Mercantile Exchange was $68.54 per barrel, down $1.40 from the previous trading day, a decrease of 2.00%, with a trading range of $68.49-$70.51. The settlement price for Brent crude oil February 2025 futures on the London Intercontinental Exchange was $72.31 per barrel, down $1.31 from the previous trading day, a decrease of 1.78%, with a trading range of $72.25-$74.28.
OPEC+ Meeting and Middle East Situation Impact on Oil Prices
The market is focused on the upcoming OPEC+ meeting. It is widely expected that OPEC+ will extend the current production cut plan by at least three months. This decision will significantly impact global oil price trends. Although the ceasefire agreement between Israel and Hezbollah has taken effect, the Middle East situation remains complex, with ongoing conflicts between the parties. More importantly, the Trump administration in the U.S. may resume its "maximum pressure" strategy against Iran, which could further suppress Iran's oil exports. Data from October shows that Iran's crude oil production has increased to 3.259 million barrels per day, up 705,000 barrels per day from the beginning of 2023. If sanctions against Iran intensify, this additional production may be withdrawn.
Potential Rebound in China's Oil Imports and Market Supply Adjustments
Another market focus is the potential rebound in China's oil imports. It is expected that China's oil imports will increase by the end of the year, driven primarily by demand for oil reserves and increased crude oil quotas for some refineries. Recently, China's Ministry of Finance and State Administration of Taxation announced adjustments to some export tax rebate policies on refined oil products, which may limit refined oil exports and exacerbate domestic refined oil oversupply. It is expected that next year, domestic refined oil supply will remain in an oversupply state, potentially affecting the demand side of the crude oil market.
Outlook for Future Oil Price Trends: Fluctuation May Become the Norm
In the short term, oil prices may continue to fluctuate within a range, primarily influenced by geopolitical risks in the Middle East, adjustments in OPEC+ policies, and the rebound in China's import demand. The market remains uncertain about whether OPEC+ will extend the production cut agreement, and any new policy changes could trigger dramatic market reactions.
In the medium to long term, global oil supply is expected to increase next year, with OPEC+ production gradually returning to the market, and OPEC+ idle capacity remaining close to 5.7 million barrels per day. In addition, oil production from non-OPEC countries such as the United States, Canada, and Brazil is also increasing, which will add pressure to market supply. Meanwhile, the demand side for oil remains relatively weak, and favorable policies need time to take effect. Therefore, oil prices may show a weak trend, especially under the impact of the Trump administration's new policies, which might exacerbate oil price fluctuations.
Overall, short-term fluctuations in oil prices will be influenced by the OPEC+ meeting and global demand changes, while the medium to long term will depend on changes in the supply side and the evolution of geopolitical risks.
