Oil commentary - 16 January 2025

Morning all. And no, this isn’t one of those early commentaries because “obviously” the football result went well and you’re a bit smug, Stanley? Nooooo, not at all! Don’t think I need to really, do I? Anyyywayyyyyy. Brent is trading this morning at, gaw blimey, $82.32, up 0.29, and WTI is trading up 0.32 at $80.36.

Is it only the 16th January? I don’t know about you, but I feel like this has been quite the start to the year. Christmas and New Year’s feel like a distant memory, and nowhere is this better reflected than in the oil markets.

Forget the Santa Rally, this is the January Jump. On the 2nd January, Brent was trading at $74.93. Today, we hit a high of $82.57—a 10.2% increase in ten days of trading. Has the rally got more legs? I would argue yes, but I’m not going to get into talks about $90 oil. Not yet anyway.

Today, I want to focus on demand. The latest OPEC+ report was out yesterday, and the group forecast world oil demand will grow by 1.45 million barrels per day in 2025, with a very similar number for 2026. (Incidentally, the group also revised demand growth for 2024 down to 1.5 million barrels per day. This from a forecast in July last year of 2.25 million barrels per day. But it was so quick that before you could say, “Sorry, what was that?” all that was left on the desk was a spinning Mont Blanc or two.)

Now, we (Kpler) have also recently issued our demand forecast for 2025 for refined products. How exciting! And I’m going to do that really brave thing you do, like when you were in your teens and you split up with your boyfriend or girlfriend by getting a mate to tell them. So, here goes. We anticipate demand growth of 0.88 million barrels per day in 2025, down from 1.4 million barrels per day in 2024 and 3.43 million barrels per day in 2023. Don’t shout at me. But do read on…

The breakdown? Let me hand over to my colleague Esteban, who put this splendid report together: “In 2025, global refined product demand growth will be driven primarily by Asia, accounting for nearly 60 per cent of total growth. LPG, gasoline, and jet fuel/kerosene are expected to lead demand increases, distributed more evenly as post-COVID transport fuel demand recovery wanes.”

Want to know more? Well, you’ll just have to jolly well reach out to your local Kplerian, won’t you?

In other news, keep an eye on the headlines regarding ceasefire talk between Israel and Hamas, which seems to have made significant progress. Any risk premium that may still be priced in may see it sold off today as tensions ease.

Good day to all.