Oil prices fell nearly 2% on Thursday, extending a December slump despite signs that market fundamentals are improving. Brent crude eased toward $61 a barrel as weak sentiment continued to outweigh supportive data. OPEC’s latest monthly report kept a firm outlook for oil demand in 2025 and 2026, pointing to resilient consumption in China, India, and the Middle East. The group also reiterated that non-OPEC supply growth is expected to slow after 2025, while OPEC+ production discipline remains a key stabilizing force. The International Energy Agency also softened its earlier bearish view, trimming its projected global oil surplus for 2026 to 3.84 million barrels per day. The revision reflects tighter supply from sanctioned producers and stronger-than-expected demand, with the agency also nudging its demand growth forecast higher. U.S. fundamentals offered further support, with crude inventories posting notable draws in both API and EIA data, signaling steady winter demand. Geopolitical risks remained elevated after Ukraine reported its first drone strike on Russian oil infrastructure in the Caspian Sea, expanding the conflict’s reach into energy assets. Still, prices moved lower, pressured by thin year-end trading, algorithmic selling, and ongoing fund de-risking—leaving sentiment firmly in control as December winds down.
Note by Alessandro Bazzoni