Oil: Supply and demand conditions may continue to ease
2025-01-27
■ Both the International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA) expect a global crude oil supply surplus
■ Considering the Trump administration's energy policy, the global crude oil supply and demand pattern may become more relaxed
International organizations have released their outlook for global crude oil supply and demand as of January. Regarding the growth of global crude oil demand (daily average) in 2025, there are still differences in their forecasts due to different views on renewable energy transition, energy efficiency improvement, and rapid electrification. Based on the resilience of the U.S. economy, the U.S. Energy Information Administration (EIA) raised its demand growth forecast from 1.29 million barrels per day last month to 1.33 million barrels per day (2024: 102.77 million barrels per day → 2025: 104.1 million barrels per day). The International Energy Agency (IEA) expects an increase of 1.1 million barrels per day (2024: 102.9 million barrels per day → 2025: 104.1 million barrels per day), while the Organization of the Petroleum Exporting Countries (OPEC) maintains its forecast of 1.45 million barrels per day (2024: 103.75 million barrels per day → 2025: 105.2 million barrels per day). The probability of a significant improvement in demand expectations is low due to the sluggish Chinese economy.
On the other hand, regarding the growth of global crude oil supply (daily average) in 2025, the EIA predicts an increase of 1.76 million barrels per day (2024: 102.6 million barrels per day → 2025: 103.6 million barrels per day), while the IEA reduces it to 1.8 million barrels per day (2024: 102.9 million barrels per day → 2025: 104.7 million barrels per day). The EIA and the IEA expect a small global crude oil supply and demand surplus in 2025, which will put downward pressure on WTI crude oil futures prices.
In the short term, supply-side topics will continue to dominate the trend of WTI. On January 10, the Biden administration of the United States announced new comprehensive sanctions on Russian oil companies and tankers transporting Russian crude oil. China and India are actively purchasing non-Russian crude oil, and Russia's seaborne crude oil exports have been significantly reduced. These sanctions have already had an early impact. The IEA pointed out that this may cause significant disruption to Russia's oil supply network, and whether the Trump administration will adjust relevant sanctions in the future has attracted much attention.
At the same time, President Trump declared a national energy emergency at his inauguration ceremony and decided to withdraw from the Paris Agreement, an international framework for addressing climate change, again. In addition, he signed an executive order to revoke former President Biden's ban on new oil production in the United States, promote the increase in domestic fossil fuel production in the United States, and require OPEC to lower crude oil prices in an attempt to curb inflation through falling energy prices. Although it is necessary to closely monitor whether OPEC+ will gradually reduce its production cut of 2.2 million barrels per day as planned from April, considering the direction of the Trump administration's energy policy, global crude oil supply and demand may further ease, and the upward pressure on WTI is expected to remain limited.
■ Considering the Trump administration's energy policy, the global crude oil supply and demand pattern may become more relaxed
International organizations have released their outlook for global crude oil supply and demand as of January. Regarding the growth of global crude oil demand (daily average) in 2025, there are still differences in their forecasts due to different views on renewable energy transition, energy efficiency improvement, and rapid electrification. Based on the resilience of the U.S. economy, the U.S. Energy Information Administration (EIA) raised its demand growth forecast from 1.29 million barrels per day last month to 1.33 million barrels per day (2024: 102.77 million barrels per day → 2025: 104.1 million barrels per day). The International Energy Agency (IEA) expects an increase of 1.1 million barrels per day (2024: 102.9 million barrels per day → 2025: 104.1 million barrels per day), while the Organization of the Petroleum Exporting Countries (OPEC) maintains its forecast of 1.45 million barrels per day (2024: 103.75 million barrels per day → 2025: 105.2 million barrels per day). The probability of a significant improvement in demand expectations is low due to the sluggish Chinese economy.
On the other hand, regarding the growth of global crude oil supply (daily average) in 2025, the EIA predicts an increase of 1.76 million barrels per day (2024: 102.6 million barrels per day → 2025: 103.6 million barrels per day), while the IEA reduces it to 1.8 million barrels per day (2024: 102.9 million barrels per day → 2025: 104.7 million barrels per day). The EIA and the IEA expect a small global crude oil supply and demand surplus in 2025, which will put downward pressure on WTI crude oil futures prices.
In the short term, supply-side topics will continue to dominate the trend of WTI. On January 10, the Biden administration of the United States announced new comprehensive sanctions on Russian oil companies and tankers transporting Russian crude oil. China and India are actively purchasing non-Russian crude oil, and Russia's seaborne crude oil exports have been significantly reduced. These sanctions have already had an early impact. The IEA pointed out that this may cause significant disruption to Russia's oil supply network, and whether the Trump administration will adjust relevant sanctions in the future has attracted much attention.
At the same time, President Trump declared a national energy emergency at his inauguration ceremony and decided to withdraw from the Paris Agreement, an international framework for addressing climate change, again. In addition, he signed an executive order to revoke former President Biden's ban on new oil production in the United States, promote the increase in domestic fossil fuel production in the United States, and require OPEC to lower crude oil prices in an attempt to curb inflation through falling energy prices. Although it is necessary to closely monitor whether OPEC+ will gradually reduce its production cut of 2.2 million barrels per day as planned from April, considering the direction of the Trump administration's energy policy, global crude oil supply and demand may further ease, and the upward pressure on WTI is expected to remain limited.