UAE Rejects Global Glut Fears, But Oil Trading Remains Flat

OPEC also predicts robust demand in the foreseeable future: File Image/Pixabay

The first trading day of the month seemed to be a repeat for range bound oil, with the Organization of the Petroleum Exporting Countries (OPEC) agreeing to raise output again against the backdrop of disappointing economic news from Asia and chronic concerns over a perceived global supply glut.

Brent settled up 12 cents at $64.89 per barrel, and West Texas Intermediate settled up 7 cents at $61.05.

Potential impact of OPEC’s weekend agreement to raise output in December by 137,000 barrels per day (bpd) was arguably nullified by the concurrent decision to suspend increases in the first quarter of 2026.

This  was viewed by some analysts as evidence that the cartel acknowledged a looming glut: Warren Patterson, head of commodities research at ING, said, “Obviously, [there is] still plenty of uncertainty over the scale of the surplus, which will be dependent on how disruptive U.S. sanctions will be to Russian oil flows.”

For its part, Morgan Stanley raised its near-term price forecast for Brent but maintained a warning for a “substantial surplus”; analysts including Martijn Rats and Charlotte Firkins wrote, “The decision to halt quota hikes during 1Q does not materially change our production forecasts but still sends an important signal...The group is still adjusting supply in response to market conditions.”

Conversely, it seemed that the latest U.S. sanctions against Russia stoked supply concerns in some quarters: Murray Auchincloss, CEO of BP, told delegates at the Adipec energy conference in Abu Dhabi that the restrictions are serious and already dampening supply.

At least one individual on Monday held firm that worries of a supply glut were unfounded: Suhail Al Mazrouei, energy minister for the United Arab Emirates, said at the Adipec conference, “I’m not going to talk about an oversupply scenario; I can’t see that…And I think all of what we are seeing is more demand.”

Ironically, OPEC too is bullish about demand growth: in its latest monthly report, the cartel predicted demand would grow by about 1.3 million bpd this year from 2024 and reach on average 105.1 million bpd, reflecting continued robust economic growth.