Canadian Oil Producers Forecast: Canada’s top oil producers, Suncor, Cenovus, and Imperial Oil, forecast higher production in 2025, driven by resilient U.S. and global demand for Canadian crude. Suncor aims to boost output by 4.4%, Cenovus expects a similar 4.4% rise fueled by the Narrows Lake project, and Imperial projects a 3.1% increase, supported by additional drilling at its Cold Lake site. The Trans Mountain pipeline expansion has improved access to U.S. and Asian markets, enhancing Canadian crude prices. Capital spending plans are mixed, with Suncor cutting 2025 expenditures by 3%, while Imperial raises its 2025 budget and increases 2024 spending by 9% to support multi-year projects. Shares of all three companies dipped on the Toronto Stock Exchange, with Imperial falling the most at 6%.
IEA Expectations: The International Energy Agency (IEA) predicts a well-supplied global oil market in 2025, despite OPEC+ production cuts and a modest rise in demand forecasts. OPEC+ plans to gradually increase output after years of cuts, but weaker-than-expected demand growth, particularly from China, poses challenges. The IEA raised its 2025 demand growth forecast to 1.1 million barrels per day (bpd), driven by China's economic stimulus, though non-OPEC+ countries like the U.S., Canada, and Brazil are expected to boost supply by 1.5 million bpd. China's shift toward an "appropriately loose" monetary policy aims to support economic recovery and increase oil consumption. Following the IEA report, Brent crude prices fell below $74 a barrel, reflecting market confidence in sufficient future oil supply.
Iranian Oil Prices to China: Iranian crude oil prices sold to China have surged to multi-year highs as new U.S. sanctions tightened shipping capacity and raised logistics costs. The sanctions, which froze several tankers involved in Iranian oil transfers, reduced China's Iranian oil imports to a four-month low of 1.31 million barrels per day in November. To offset rising costs, some Chinese refiners are turning to alternative suppliers from the Middle East and West Africa, while discounts on Iranian Light and Heavy crude have narrowed significantly since early November. Despite higher costs, China's independent refiners have increased fuel output, driven by new government import quotas, with refining margins flipping to a profit after months of losses. China's overall crude imports grew annually for the first time in seven months, as refiners took advantage of lower global oil prices to boost stockpiles.
Market Overview: Oil prices rose more than 1% today, marking the first weekly gain since late November, driven by concerns over supply disruptions due to tighter EU sanctions on Russia and potential U.S. actions. U.S. West Texas Intermediate crude climbed 0.5% to $70.34 a barrel, with a weekly gain of over 3%, supported by hopes that China's recent stimulus measures would boost demand. European Union ambassadors agreed on a 15th sanctions package targeting Russia’s shadow tanker fleet, while China’s crude imports increased annually for the first time in seven months, driven by lower prices and stockpiling. The International Energy Agency raised its forecast for 2025 global oil demand growth, citing China's stimulus efforts, but projected a surplus next year as non-OPEC+ nations are expected to raise supply. Investors are also anticipating interest rate cuts by the Federal Reserve following an unexpected rise in U.S. unemployment claims.
Next year's surplus, as forecast by the IEA, could make it harder for OPEC+ to bring back production. The hike was earlier due to start in October 2024, but OPEC+ has delayed it amid falling prices. Forecasts on the strength of demand growth in2024 vary, partly due to differences over demand from China and the pace of the world's switch to cleaner fuels. The IEA's view is at the lower end of industry estimates and in the report, it trimmed its forecast of 2024 world demand growth to 840,000 bpd, down 80,000 bpd from last month. OPEC, which is at the top end, on Wednesday cut its demand growth forecasts for this year and next, but still expects more rapid growth than the IEA of 1.61 million bpd and 1.45 million bpd respectively.
Oil prices rose about 1% to a three-week high today due to expectations of tighter sanctions on Russia and Iran, along with potential interest rate cuts in the U.S. and Europe. U.S. West Texas Intermediate (WTI) crude climbed 1.1% to $70.81 a barrel, marking its highest close since November 22 and a 5% weekly gain. Analysts attributed the rise to tighter sanctions, stronger Chinese economic signals, and possible Federal Reserve rate cuts. Chinese crude imports increased for the first time in seven months, with expectations of sustained high imports due to lower prices and increased supply from Saudi Arabia. The International Energy Agency raised its forecast for 2025 global oil demand growth, citing China's stimulus measures and projected supply increases from non-OPEC+ nations.
