Brent sheds as market prepares for production boost in the US

The front-month ICE Brent contract has lost $0.24/bbl on the day, to trade at $75.93/bbl at 09.00 GMT.

PHOTO: Oil barrels kept next to an oil well. Getty Images

Upward pressure:

Brent’s price has continued to trade above $75/bbl as oil demand growth optimism in the US got a boost from increased oil use for heating purposes during the winter storms.

Oil prices have been rallying, “on the back of severe cold weather in the US and Europe,” VANDA Insights’ founder and analyst Vandana Hari said.

Additionally, state-owned refiners in China are set to increase crude throughput in January amid expectations of strong demand for oil products around the Chinese New Year.

Chinese state-owned refiners plan to process a total of 40.50 million mt of crude in January, with the daily throughput at around 1.31 million mt (9.62 million b/d), up 3.12% from December 2024.

Downward pressure:

The surge in oil production outside OPEC+ has put some downward pressure on Brent’s price in recent days, according to market analysts, with more efficient ways to boost oil output in the US.

Global oil production is “rising at an average rate of more than 4% per year as the industry learns to squeeze more output from fewer rigs,” independent market analyst John Kemp remarked.

“Persistent production growth has frustrated efforts by Saudi Arabia and its OPEC⁺ allies to drain excess inventories and drive price higher by reducing their own output,” Kemp added.

Oil market investors are now waiting for new policy changes on oil production in the US as President-elect Donald Trump prepares to take office later this month.

By Aparupa Mazumder

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