Oil Glut Possible In 2025

After weeks of steady decline, oil prices ticked higher to start the week.  Patrick DeHaan with Gasbuddy.com said West Texas Crude increased about 2% in Monday’s action, trading around $69-$70 per barrel.  He said oil prices have perked up a bit after fighting between Ukraine and Russia intensified over the weekend.

“Russia, sending the most significant attacks across the border into Ukraine in the last few months, and that has got oil prices jumping up a bit here this morning....Wholesale gasoline prices and diesel also trending up a little bit with this weekend develop. And although this is really the only issue pushing oil up, there are still economic concerns and demand weakness in China.”

DeHann added there are other reasons he and other market watchers believe oil prices may decrease over the coming months, primarily due to a potential glut of oil heading into 2025.

“OPEC has long had spare capacity," DeHaan said.  "They've planned to roll back some of their production cuts from last year, and so that could lead to an increase in oil production as OPEC gradually restores oil production that it had cut back a little over a year ago.  And that's why there's been talk of a potential glut that's been forming.  Saudi Arabia has been producing far less crude oil to maintain upward pressure on oil price.  And OPEC, which has kicked the can down the road to restoring some of its oil production in January, likely really wants to increase oil production in a more meaningful way.  And that could produce a glut of oil on the market.  In addition, there is a shifting narrative we'll have to see if President Trump in January signals an increase in sanctions on Iran; that could provide OPEC a bit of opening for increasing oil production.”

DeHaan said while that relief is still down the road, consumers enjoy relief in time for their holiday travel plans.  He added gasoline and diesel prices are down nationally, and he expects them to stay lower for the foreseeable future.

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