Oil steadies near November lows with outlook for demand in focus

Oil steadied neared its lowest level this month, with the outlook for demand in focus after OPEC cut projections again on China’s slowdown.

West Texas Intermediate traded near $68 a barrel after ending little changed on Tuesday, with Brent closing below $72. OPEC shaved its demand-growth forecasts for a fourth consecutive month, yet the cartel remains more bullish than other market watchers, with many analysts warning of a glut next year.

Crude has traded in a relatively tight range since the middle of last month, with traders tracking trends in Chinese consumption, tensions in the Middle East, and the implications of Donald Trump’s re-election to the Oval Office. After the monthly report from OPEC, the US will issue its short-term outlook later Wednesday, followed by the Energy Agency’s view on Thursday.

Reflecting the bearish outlook, timespreads have weakened in recent sessions. While they remain in a backwardated structure — with nearby contracts at a premium to longer-dated ones — the gap has narrowed. Among the most notable is WTI’s prompt spread, which hit the lowest since February earlier this week.

“The oil market appears to be heading for a sizeable surplus in 2025, driven by a combination of decelerating oil demand growth, still-robust non-OPEC supply growth, and OPEC’s ambition to start growing supply as well,” Morgan Stanley analysts including Martijn Rats said in a report. The bank cut its Brent forecasts, with the first-quarter 2025 outlook reduced by $5.50 to $72 a barrel.

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