Oil prices rose on Thursday bolstered by OPEC forecast of robust oil demand growth in 2025, while market participants also remained wary of geopolitical developments. OPEC, in a monthly report predicted world oil demand will rise by 1.85M bbl/day in 2025 to 106.2M bbl/day after growing by 2.25M bbl/day for 2024.
“Brent crude prices remain broadly stuck in a range as they have been over the past two weeks, as market participants struggle to weigh mixed demand-supply dynamics with prevailing geopolitical tensions,” the report said, quoting Yeap Jun Rong, market strategist at IG.
Meanwhile, severe winter weather has disrupted oil production in the Bakken and the Permian, and JPM Commodities expect additional minor outages in the Eagle Ford and the Gulf Coast. “Production outages in North Dakota are estimated to have peaked at around 700 kbd—more than half of what the basin produced last month and significantly larger than the initial estimates of 280 kbd disruption going into last weekend.” Brokerage adjusts US crude and condensate production forecast down by 365 kbd for January and cut natural gas supply by 3.6 Bcf/day.
In the precious metals complex, prices inched higher against a softer dollar index (DXY), although traders cut down some of the extreme dovishness priced into the 2024 interest rate outlook.
“Gold is set to benefit from easing monetary policy, elevated geopolitical risks and strong central bank buying. Given the low investor allocation to the sector, any rebound in investment demand will be a powerful tailwind,” ANZ said in a note.
It further added that, the metals sector is facing its own supply side issues. Low prices and a challenging regulatory environment have led to closures across copper, zinc and critical mineral markets. This is delaying new projects, which could have big implications for the energy transition in the medium term. The uncertain economic backdrop will make that harder.
ING reported, primary aluminium output in China increased 3.7% year-on-year to a record of 41.59 million tonnes in 2023. December’s production was 3.59 million tonnes, up 4.9% year-on-year, but down on a daily basis as smelters in Yunnan reduced output in reaction to the province’s limited power supply during the dry season.
Elsewhere among agriculture commodities, soybean futures gained, while wheat and cocoa traded lower. In agriculture, the recent cold spell in the US poses potential risk to the 2024 winter wheat crop, JPM says.
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