Oil climbs amid OPEC supply cuts, strong US jobs data

Onome Amuge

The oil market witnessed a surge on Wednesday, buoyed by an anticipated shortfall in oil supplies from Russia and OPEC members, along with a surprising upturn in U.S. job openings which signaled an increase in economic activity and therefore a greater demand for oil.

In the global oil market, Brent crude prices increased by 37 cents, representing a 0.5 percent rise to $77.42 per barrel, while West Texas Intermediate (WTI) crude futures also saw a 0.6 percent gain of 44 cents, climbing to $74.69 per barrel.

The Organization of the Petroleum Exporting Countries (OPEC) saw a decline in oil production for December, a recent Reuters survey revealed. The survey demonstrated that the downward trend was primarily caused by the United Arab Emirates undertaking routine field maintenance, which offset increases in Nigerian output and other modest gains across the organisation.

Russia’s oil production slipped below its target in December, averaging 8.971 million barrels per day, according to a report by Bloomberg that cited the country’s energy ministry. This fall in oil production is likely to further tighten global supply, which could in turn lead to increased oil prices.

Meanwhile, the U.S. Job Openings and Labor Turnover Survey (JOLTS) revealed that job vacancies increased in November, while layoffs remained low and workers were reluctant to leave their current positions.

The latest figures from the American Petroleum Institute (API) revealed that U.S. crude oil stocks declined last week, while fuel inventories experienced an upward trend.

In terms of future projections, analysts anticipate that oil prices will be lower on average in 2025 compared to 2024. This anticipated drop is partly attributed to an expected rise in oil production from non-OPEC countries.

BMI, a division of Fitch Group, recently released a client note outlining its prediction that Brent crude will average $76 per barrel in 2025, a 4 percent decrease from its forecasted average price of $80 per barrel in 2024.

BMI’s bearish forecast is underpinned by their fundamental data projection, which indicates that the global oil market could see an oversupply this year. BMI’s data suggests that the supply of crude oil is expected to outpace demand by 485,000 barrels per day.