Oil Ends 2024 On Second Consecutive Annual Loss As Uncertainly Greets The New Year

Still, some experts believe chronic bearishness has been oversold: File Image/Pixabay 

The last trading day of 2024 saw oil prices contribute to a 3 percent annual loss, the second consecutive yearly decline, with bearish sentiment showing no sign of letting up and many investors certain that demand in the New Year will be muted.

Brent on Tuesday settled up 65 cents to $74.64 per barrel, while West Texas Intermediate settled up 73 cents to $71.72 per barrel; Brent was down around 3 percent from its final 2023 closing price of $77.04, while WTI was flat with last year's final settlement.

Tuesday’s price gains were attributed to the U.S. Energy Information Administration disclosing that U.S. oil production rose 259,000 barrels per day (bpd) to a record high of 13.46 million bpd in October, as demand surged to the strongest levels since the pandemic.

But output is also at the heart of the bearishness that sees many traders assuming that 2025 will be a fairly dismal year for the commodity, spurred by agencies such as the Organisation of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA), both of which downgraded their oil demand growth expectations for this year and next.

Still, some experts think U.S. president elect Donald Trump may provide a much-needed shake-up of market conditions: Phil Flynn, senior market analyst for Price Futures Group Inc., said, "With the possibility of tighter sanctions on Iranian oil with Trump coming in next month, we are looking at a much tighter oil market going into the new year."

Ole Hansen, head of commodity strategy at Saxo Bank, added, "At the cusp of 2025, prices have found some support on speculation Iran, Venezuela and Russia may struggle to maintain production levels next year."

David Morrison, senior market analyst at Trade Nation, was another analyst who suspected conditions might not be as bad in 2025 as OPEC and related agencies have stated will be the case: he said, "Crude oil is showing signs of life, and it could be that it manages to break out of the downtrend that has kept prices subdued over the past four months.”

John Driscoll, director and founder of Singapore-based JTD Energy Services, was yet another pundit who provided some measure of cheer on New Year’s Eve: “I’m not fully buying into this overwhelming bearishness,” he said, adding that “We may yet see some discipline on the upstream side from the oil producers, and I would not rule out the possibilities of black swans like geopolitical events or extreme weather.”