- Crude Oil Prices Under Pressure: Geopolitical Risk Premiums Decrease Post-Trump Election
- Potential Surplus Expected in 2025: Weak Demand from China, Increased Non-OPEC Production
- Technical Analysis Indicates Bearish Trends for WTI Oil Prices
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Crude oil prices rebounded on Monday after a 2% drop on Friday. Despite a 3-month losing streak in October, last week saw a 4% drop, pushing prices in the red for the month.
With rising supply and limited demand growth, along with a bearish technical trend, the downward trend is likely to continue unless a significant reversal occurs soon.
Sentiment towards crude oil has turned bearish post-Trump’s election victory, with concerns of excess surplus from non-OPEC producers. If OPEC+ fails to extend their production agreement, we could see further selling pressure.
Supply Concerns and Lower Geopolitical Risk Premium
Non-OPEC supply growth is on the rise, putting pressure on OPEC+ to support prices. Trump’s plans may lead to increased US drilling activity, potentially boosting production levels by 2025.
Geopolitical risk premiums have decreased post-Trump’s election, as markets anticipate peace deals in conflict regions. However, uncertainty remains around the timeline and delivery of these promises.
Crude Oil Market Heading for Surplus in 2025
IEA predicts a surplus in the oil market next year, driven by weakening demand from China and increased production from non-OPEC countries like the US and Brazil.
Demand growth in China has slowed significantly, while oil production continues to rise, leading to concerns of excess supply.
Demand Concerns Intensify
OPEC has cut its oil demand growth forecast for the fourth consecutive month, citing weak demand in China. Plans to increase production in January could be postponed if prices continue to fall.
WTI Technical Analysis and Trade Ideas
WTI oil prices are facing resistance around $67.30 to $68.00, with a potential downside target of $65.27 if support levels break. A recovery could push prices towards $70.00 with stronger resistance.
Key Takeaway Point
Lackluster economic conditions, shifting to clean energy, and rising supplies indicate a bearish outlook for oil prices in the near term. Traders should focus on bearish setups near resistance levels.
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should evaluate all risks before making any investment decisions.
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