Oil Prices Slide as Strong Dollar and Economic Concerns Weigh Heavy

Oil prices dropped on December 26, 2024, reflecting the impact of a strong U.S. dollar and concerns over global demand.

Brent crude futures closed at $73.26 per barrel, down 0.43%, while West Texas Intermediate (WTI) fell to $69.62, a decline of 0.48%. These figures illustrate the ongoing volatility in the oil market.

The U.S. dollar’s strength makes oil more expensive for buyers using other currencies, dampening international demand. This situation creates a challenging environment for oil producers, especially as they navigate fluctuating market dynamics.

China’s plans to issue 3 trillion yuan ($411 billion) in special treasury bonds aim to stimulate its economy and increase consumer demand.

However, analysts express skepticism about the effectiveness of these measures given China’s current economic struggles. The World Bank recently raised growth forecasts for China.

Oil Prices Slide as Strong Dollar and Economic Concerns Weigh Heavy. (Photo Internet reproduction)

However, it warned that weak consumer confidence and real estate issues could hinder recovery. Global oil demand growth has slowed significantly this year, with projections indicating an increase of only 840,000 barrels per day (bpd) in 2024.

Initially expected to drive much of this growth, China‘s contribution has fallen to about 20%. Other emerging economies also show limited increases in demand, leading to a more cautious outlook for global consumption.

OPEC+ continues to manage production cuts in response to these trends. The organization remains cautious about increasing output without clear signs of rising demand.

Current estimates suggest a supply surplus could develop by mid-2025 if production increases outpace consumption. As the year ends, oil markets remain sensitive to geopolitical tensions and economic indicators.

While hopes for renewed demand from China exist, the strong dollar poses significant challenges that could keep oil prices under pressure in the near term.