In the pre-holiday trading session, WTI crude oil futures rose to around $69.5 per barrel, recovering from earlier losses and reflecting positive support from economic data. The thin trading volume typical of this time of year contributed to the price fluctuations, but the price increase was primarily driven by two factors: the strong US economic data and an increase in India’s crude oil imports. However, there were still concerns regarding potential oversupply in the coming months, which continued to weigh on the market.

Support from US Economic Data

One of the key factors that helped oil prices find support was the release of fresh data from the United States, showing that the economy of the world’s largest oil consumer remains resilient as it heads into the year-end. Despite global recession concerns, US economic strength indicates sustained demand for oil, which provided optimism for oil markets. The positive economic outlook helped bolster investor confidence, pushing oil prices higher.

India’s Rising Crude Oil Imports

Another important driver for the rise in oil prices was the increase in India’s crude oil imports. In November 2024, India’s crude oil imports surged 2.6% year-on-year to 19.07 million metric tons. This was attributed to rising economic activity and increased travel demand. As the world’s third-largest oil importer, India plays a critical role in global oil demand, and the increase in imports suggests that demand in Asia remains robust. This was an important signal for the global oil market, particularly as other major consumers like China continue to manage their oil consumption cautiously.

Concerns About Oversupply and Stronger US Dollar

While these factors provided support, concerns about potential oversupply in the next year continued to weigh on oil prices. Global oil supply remains a sensitive issue, and traders are cautious about the possibility of overproduction in the coming months, especially as some countries ramp up production in response to economic pressures. Additionally, a stronger US dollar added downward pressure on the price of dollar-denominated commodities, including oil, making it more expensive for non-dollar-based buyers to purchase crude oil.

European Supply Fears Ease

There was some relief in Europe as reports emerged that the Druzhba pipeline, a major source of Russian oil to Europe, resumed operations after technical issues at a pumping station. The pipeline’s temporary disruption had previously raised concerns about potential supply shortages in Europe, and its resumption helped ease fears of a supply squeeze in the region. This news provided some stability in the oil market and helped curb the volatility that had been building in European oil supplies.

Sinopec’s Projections Add Pressure

At the same time, recent comments from Sinopec, Asia’s largest oil refiner, added some downward pressure on oil prices. Sinopec projected that China’s oil consumption would likely peak by 2027, signaling a potential slowdown in demand growth from one of the world’s largest oil consumers. This projection raised concerns about long-term demand trends and contributed to bearish sentiment in the market.

In conclusion, oil prices have found support in the short term due to strong economic data from the US and rising demand from India. However, concerns about oversupply, the strong US dollar, and long-term demand forecasts from Sinopec remain significant factors that could influence oil prices moving forward. Traders and investors will continue to monitor global economic developments, supply disruptions, and geopolitical tensions as they navigate the oil market in the coming months.

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