Oil trading in 2024 was marked by the near complete dominance of algorithmic trading. While not a new trend, algo trading arguably reached its peak last year, with technical analysis largely displacing any factual fundamentals considerations. Instead of making traders money, however, algo trading has lost them money.
In an oil and gas report sent to Rigzone by the Macquarie team late Wednesday, Macquarie strategists said it appears to them that the oil market “is reviewing 2025 balances and becoming incrementally less bearish”.
It’s been a relatively calm week for oil prices despite plenty of developments on both the geopolitical and fundamental front, but prices might just begin to climb next week.
Oil market forecasters such as the International Energy Agency (IEA) may have been too pessimistic about supply-demand balances in their latest assessments, which show a large surplus for 2025.
Steep gasoline and diesel inventory draws in the United States have helped offset the overwhelmingly bearish sentiment in the oil market, although it wasn’t enough to halt the decline in oil prices. With China posting its seventh successive month of refinery run declines and Jerome Powell cooling down expectations on U.S. interest rate cuts, Brent below $72 per barrel feels justified.
The demand growth projection for 2025 was revised slightly down to 990,000 bpd from 998,000 bpd, as the agency warned that demand growth this year and next will be much lower than in previous years, also because of weak Chinese demand.
The U.S. presidential election promises to dominate global news coverage for the next 24 hours, and oil markets will be watching developments closely after both WTI and Brent banked gains from the OPEC+ decision on Monday.
Oil prices extended gains on Thursday after the killing of a Hamas leader in Iran raised the threat of a wider Middle East conflict and concern over its impact on oil.
Disruptions to shipping in the Red Sea and via the Suez Canal are raising the prices of African and U.S. crude grades.
Brent crude sees stronger backwardation.
Analysts expect drawdowns in global stocks this month and next to support oil prices.
The inertia of oil prices during the Red Sea oil crisis has made oil traders complacent.
Fears of an escalation of the Israel-Hamas war have subsided amid talks about a ceasefire.
The rerouting of oil tankers directly increases oil demand—by around 200,000 bpd so far.