Oil Markets Go Bearish As Brent Dips to $72 per barrel

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Sentiment in oil markets is decidedly bearish as the year draws to a close, with the Federal Reserve making it clear that it will not be aggressively cutting interest rates any time soon.

Slower and shallower were the two key takeaways for the Federal Reserves 2025 rate policy outlook, with a suggested prolonged pause in rate-cutting next year adding insult to the oil market’s injury. China remains a bearish factor for oil with almost all 2025 outlooks trying to outcompete one another in terms of bearishness, all this leading to a dip in Brent prices to $72 per barrel again.

China’s state refining giant Sinopec (SHA: 600028) expects the country’s oil consumption to peak by 2027 at 16 million b/d, with growth only coming from the petrochemicals sector as both gasoline and diesel are expected to fall next year, by 2.4% and 5.5%.

US oil major Chevron (NYSE:CVX) announced it would sell its interest in the North West Shelf venture it co-operates with Australia’s Woodside (ASX:WDS) in return for the latter’s 13% stake in the $34 billion Wheatstone LNG project and an associated field.

The spread between WTI and Brent futures narrowed to $3.40 per barrel this week, the smallest reading since October 2023 as tight crude inventories in the United States strengthened the US benchmark, restricting US oil exports after record volumes to NW Europe last month.

As Brazil prepares to hold its next upstream licensing round in the first half of 2025, its Energy Ministry announced it would add 393 new oil exploration blocks and 5 discovered fields to its permanent offer portfolio, mostly offshore blocks in the Santos basin.

Disappointed by the lack of improvements in China’s economy and the Australian government’s highly bearish forecast that sees iron ore averaging $80 per metric tonne in 2025, the metal posted four consecutive days of declines and dropped toward $101/mt.

UK oil major BP (NYSE:BP) agreed on technical terms with the government of Iraq to revive one of the largest oil fields in the country, Kirkuk, a decade after it was ravaged by the Islamic State, marking a return of BP to the field that it initially discovered in 1927.

The International Energy Agency has revamped its coal demand forecast again, expecting global consumption for coal to hit new records every year through at least 2027, increasing to nearly 8.9 billion tonnes by 2027 largely thanks to India and China.

US producers of graphite have filed petitions with two federal agencies this week, asking for investigations on potential Chinese violations of anti-dumping laws and demanding that the White House slap a punitive 920% tariff on China-produced graphite.

The US Environmental Protection Agency approved California’s landmark plan to ban gasoline-only vehicles by 2035, as the automotive industry expects President-elect Trump to rescind federal mandates on EV sales and tighter vehicle emission standards.

Almost tripling over the course of 2024, cocoa futures rose to an all-time high of $12,636 per metric tonne this week as the Ivory Coast’s harvest outlook once again downgraded to 1.9 million tonnes, almost 15% lower than the government’s own forecast.

ADNOC Drilling, the upstream unit of the UAE’s state oil firm ADNOC, has formed Turnwell Industries, a joint venture with oilfield service majors SLB (NYSE:SLB) and Patterson-UTI (NASDAQ:PTEN), seeking to tap into the country’s 220 billion barrels of unconventional oil.

US President-elect Donald Trump said that the EU could face tariffs if the regional bloc does not shrink its widening trade deficit with the United States by purchasing more US oil and gas, extending the tariff threat beyond China, Canada and Mexico.

India’s largest private refiner Reliance has resumed an oil swap deal with Venezuela’s PDVSA, sending a 500,000-barrel cargo of heavy naphtha in return for a VLCC laden with heavy Venezuelan Merey after the transaction was greenlighted by the White House.