OIL prices edged lower on Monday (Dec 23) in thin trade ahead of the Christmas holiday on concerns about a supply surplus next year and a strengthened US dollar.
Brent crude futures settled down 31 US cents, or 0.43 per cent, at US$72.63 a barrel. US West Texas Intermediate (WTI) crude futures fell 22 US cents, or 0.32 per cent, to US$69.24 a barrel.
Macquarie analysts projected a growing supply surplus for next year, which will hold Brent prices to an average of US$70.50 a barrel, down from this year’s average of US$79.64, they said in a December report.
Concerns about European supply eased on reports the Druzhba pipeline, which sends Russian and Kazakh oil to Hungary, Slovakia, the Czech Republic and Germany, has restarted after halting on Thursday due to technical problems at a Russian pumping station.
The US dollar was hovering around two-year highs on Monday morning, after hitting that milestone on Friday.
“With the US dollar changing from weaker to stronger, oil prices have given up earlier gains,” UBS analyst Giovanni Staunovo said.
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A stronger US dollar makes oil more expensive for holders of other currencies.
On Friday, US data that showed cooling inflation helped alleviate concerns after the Federal Reserve interest rate cut last week.
“With the Fed sending mixed signals and some of these economic data points not being all that robust, the market is listless,” said John Kilduff, partner at Again Capital in New York.
Brent futures fell by around 2.1 per cent last week, while WTI futures lost 2.6 per cent, on concerns about global economic growth and oil demand after the US central bank signalled caution over further easing of monetary policy.
Research from Asia’s top refiner Sinopec pointing to China’s oil consumption peaking in 2027 also weighed on prices.
US president-elect Donald Trump on Friday urged the European Union to increase US oil and gas imports or face tariffs on the bloc’s exports.
Trump also threatened to reassert US control over the Panama Canal on Sunday, accusing Panama of charging excessive rates to use the Central American passage and drawing a sharp rebuke from Panamanian President Jose Raul Mulino. REUTERS
