Oil prices rose very slightly on Tuesday, but remain weighed down by the prospect of sluggish Chinese demand, while supply could be oversupplied in the months to come. The price of a barrel of Brent from the North Sea, for delivery in January, gained 0.08% to close at $71.89. That of a barrel of American West Texas Intermediate (WTI), maturing in December, gained 0.12% to $68.12.
“Yesterday (Monday) was marked by a sharp drop”recalled to AFP Robert Yawger, of Mizuho USA, for whom prices advanced slightly on Tuesday at the start of the day thanks to a technical rebound. The market, however, remains weighed down by the prospect of an increase in customs tariffs promised by Donald Trump, freshly re-elected in the United States. The Republican candidate has made customs duties the cornerstone of his trade policy, evoking the imposition of a surcharge of 10 to 20% on all foreign products entering the United States and promised to go as far as ‘to 60% for those coming from China, the world’s largest importer of oil. “China has been the engine of growth in global crude demand for years, but it will struggle if its main trading partner plans to impose tariffs.” as important, observed Mr. Yawger.
Oil surplus
The Organization of the Petroleum Exporting Countries (OPEC) on Tuesday again revised down its previous demand estimate for 2024 and 2025, after an initial adjustment last month. On the supply side, an oil surplus is expected for next year and “the United States is producing at record levels” while “OPEC has a large reserve capacity”added the analyst. In early November, several members of OPEC+ (OPEC and its allies), including Saudi Arabia and Russia, announced an extension of their oil production cuts until the end of December, thus postponing the reopening of the floodgates. . In addition, the explosion of the dollar following Donald Trump’s victory continues to weigh on prices.
The American currency has soared by 2.83% since Wednesday, and since oil is most often exchanged in dollars, an appreciation of the greenback increases the oil bill. “This inverse relationship with the price of crude oil (…) is naturally negative” for classes, Mr. Yawger said. “All these problems (…) are putting pressure on the market, and it will be difficult to reverse the situation in the coming days (because) the fundamentals are not good”he added.
