By Erwin Seba
HOUSTON (Reuters) -Oil prices fell on Tuesday after a U.S. government agency forecast stable U.S. oil demand through 2025 while raising its supply forecast.
The declines were limited by new US sanctions on Russian oil exports to India and China.
futures fell $1.09, or 1.35%, to settle at $79.92 a barrel. U.S. West Texas Intermediate (WTI) crude ended at $77.50 per barrel, down $1.32, or 1.67%.
Prices rose 2% on Monday after the US Treasury Department imposed sanctions on Friday on Gazprom (MCX:) Neft and Surgutneftegas, as well as 183 ships carrying oil as part of Russia’s so-called shadow fleet of tankers.
On Tuesday, the US Energy Information Administration said the country’s oil demand would remain stable at 20.5 million barrels per day (bpd) in 2025 and 2026, with domestic oil production rising to 13.55 million barrels per day, a up from the agency’s previous forecast of 13.52 million barrels per day. bpd for this year.
Phil Flynn, senior analyst at Price Futures Group, said markets were anticipating the near-term EIA energy outlook to see if a forecast increase in supply would be reversed.
“They’re waiting to see if EIA’s previously predicted abundance is still in the forecast,” Flynn said.
While analysts still expected a significant price impact on Russian oil supplies as a result of the new sanctions, their impact on the physical market could be less pronounced than what the affected volumes would suggest.
ING analysts estimated that the new sanctions have the potential to wipe out the entire 700,000 barrels per day surplus they had forecast for this year, but said the actual impact could be lower.
“The actual reduction in financial flows will likely be less as Russia and buyers find ways around these sanctions,” they said in a note.
Uncertainty about demand from major buyer China could weaken the impact of the tighter supply. Chinese imports fell in 2024 for the first time in two decades outside the COVID-19 pandemic, official data showed on Monday.
