Oil Prices Increase Amid Tightened OPEC Supply and Positive U.S. Job Data

On Wednesday, oil prices experienced an upswing, driven by tighter supplies from Russia and the members of the Organization of the Petroleum Exporting Countries (OPEC). This increase coincided with fresh U.S. job data that indicated a surprising rise in job openings, suggesting a boost in economic activity and resulting in heightened demand for oil.

Brent crude futures rose by 28 cents, or 0.36%, reaching $77.33 per barrel at 0415 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude gained 40 cents, or 0.54%, to settle at $74.65 per barrel.

Supply Dynamics

Recent surveys, including one from Reuters, revealed a decline in oil output from OPEC in December, following two months of increases. Maintenance work in the United Arab Emirates countered a surge in production from Nigeria and other nations within the group.

Additionally, oil production in Russia averaged 8.971 million barrels per day in December, which fell short of the country's production targets, as reported by Bloomberg and cited by the energy ministry.

Economic Indicators

On the economic front, data from the Job Openings and Labor Turnover Survey highlighted an increase in job openings in the U.S. for November. Moreover, the number of layoffs remained low, indicating that workers are not inclined to leave their positions.

Yeap Jun Rong, a market strategist at IG, commented, “The strong U.S. economic data continues to enhance the outlook for the country's economy and its oil demand, further encouraged by a larger-than-expected drawdown in crude inventories.”

He also noted that after a period of tight trading since October last year, the pressures to sell may have diminished, allowing for a slight recovery in oil prices.

Future Expectations

According to market sources referencing data from the American Petroleum Institute, U.S. crude oil inventories saw a decrease last week, while fuel reserves increased.

Looking ahead, analysts predict that oil prices will generally decline throughout this year compared to 2024, largely due to increased production from non-OPEC countries. The BMI, part of the Fitch Group, maintains that Brent crude is expected to average $76 per barrel in 2025, a decrease from an estimated average of $80 per barrel in 2024.

The bearish outlook is driven by fundamental data forecasts, suggesting that supply growth may surpass demand growth by approximately 485,000 barrels per day this year.

Oil, OPEC, Jobs, Economy