Crude should be closely monitored – London Business News | Londonlovesbusiness.com

Moves in crude may not get the same level of attention from market players as we see towards the raging trend in the USD, and other consensus US election expressions, but it should.

And, crude should be closely monitored as the dynamics unfolding could have important ramifications for broad markets, which currently offers an honest story of global demand.

Reports breaking from the IEA that the global oil market faces a 1-million-barrel glut in 2025 is perhaps not a huge surprise to those close to the oil market, and notably given recent data showing demand from China, the US and Japan was lower than many had feared.

But with crude priced towards the lower levels of its multi-month range and with potentially ugly tariff negotiations likely to impact global growth and by extension the crude market, these headlines from the IEA only re-enforce the notion that the skew in risk for the oil market is for lower prices, and it takes a brave soul to position for upside.

A break below $70.72 (13 Nov low) in Brent futures evolves the technical setup and would naturally increase the prospects of the year-to-date low of $68.68 coming into play. The heavy hitters within OPEC+ are already running output levels well below capacity and would love to be in a position to lift their output run rate – but if the demand just isn’t there, amid an oversupplied oil market in 2025, then these nations are constrained and lack the capacity to increase barrels.

The threat of production increases in the US makes this dynamic even more of a challenge, although the need for the incoming Trump administration to aggressively pursue this policy is diminished by lower prices and a disdain from US producers to increase supply from already record levels. The risk of a breakdown in the crude prices increases, and how OPEC+ reacts – should it play out – suggests crude should be more closely followed.