Oil prices post 3% annual decline, slipping for second year in a row | Reuters

Oil prices post 3% annual decline, slipping for second year in a row | Reuters

Oil prices fell around 3% in 2024, slipping for a second straight year, as the post-pandemic demand recovery stalled, China's economy struggled, and the U.S. and other non-OPEC producers pumped more crude into a well-supplied global market.

Brent crude futures on Tuesday, the last trading day of the year, settled up 65 cents, or 0.88%, to $74.64 a barrel. U.S. West Texas Intermediate (WTI) crude settled up 73 cents, or 1.03%, to $71.72 a barrel.

The Brent benchmark settled down around 3% from its final 2023 closing price of $77.04, while WTI was roughly flat with last year's final settlement.

In September, Brent futures closed below $70 a barrel for the first time since December 2021, and this year Brent broadly traded under highs seen in the past few years as the post-pandemic demand rebound and price shocks of Russia's 2022 invasion of Ukraine began to fade.

Oil will likely trade around $70 a barrel in 2025 on weak Chinese demand and rising global supplies, offsetting OPEC+-led efforts to shore up the market, a Reuters monthly poll showed on Tuesday.

A weaker demand outlook in China in particular forced both the Organisation of the Petroleum Exporting Countries and the International Energy Agency (IEA) to cut their oil demand growth expectations for 2024 and 2025.

The IEA sees the oil market entering 2025 in surplus, even after OPEC and its allies delayed their plan to start raising output until April 2025 against a backdrop of falling prices.

U.S. oil production rose 259,000 barrels per day to a record high of 13.46 million bpd in October, as demand surged to the strongest levels since the pandemic, data from the U.S. Energy Information Administration (EIA) showed on Tuesday.

Output is set to rise to a new record of 13.52 million bpd next year, the EIA said.

ECONOMIC, REGULATORY OUTLOOK
Investors will be watching the Federal Reserve's interest rate-cut outlook for 2025 after Fed bank policymakers this month projected a slower path due to stubbornly high inflation.

Lower interest rates generally spur economic growth, which feeds energy demand.

Some analysts still believe supply could tighten next year depending on President-elect Donald Trump's policies, including those on sanctions. He has called for an immediate ceasefire in the Russia-Ukraine war, and he could re-impose a so-called maximum pressure policy toward Iran, which could have major implications for oil markets.

"With the possibility of tighter sanctions on Iranian oil with Trump coming in next month, we are looking at a much tighter oil market going into the new year," said Phil Flynn, a senior analyst for Price Futures Group, also citing firming Indian demand and recent stronger Chinese manufacturing data.

China's manufacturing activity expanded for a third-straight month in December, though at a slower pace, suggesting a blitz of fresh stimulus is helping to support the world's second-largest economy.

Buoying prices on Tuesday, the U.S. military said it carried out strikes against Houthi targets in Sanaa and coastal locations in Yemen on Monday and Tuesday.

The Iran-backed militant group has been attacking commercial shipping in the Red Sea for more than a year in solidarity with Palestinians amid Israel's year-long war in Gaza, threatening global oil flows.

Most Gulf markets wrap up 2024 with sparse gains; #Dubai stands out | Reuters

Most Gulf markets wrap up 2024 with sparse gains; Dubai stands out | Reuters

Most stock markets in the Gulf ended higher on Tuesday, concluding the year with meagre gains amid weak oil prices, although the Dubai index outshone its peers.

Saudi Arabia's benchmark index (.TASI), opens new tab gained 0.3%, with Al Rajhi Bank (1120.SE), opens new tab rising 0.8%.

The Saudi index was up 0.6% for the year 2024.

Dubai's main share index (.DFMGI), opens new tab closed 0.1% higher, hitting its highest since May 2014, helped by a 1.2% rise in top lender Emirates NBD (ENBD.DU), opens new tab.

The Dubai index notched a yearly gain of over 27% - its biggest since 2021 - outperforming its Gulf peers on the back of real estate division.

Elsewhere, blue-chip developer Emaar Properties (EMAR.DU), opens new tab, which finished flat on the day, registered annual gains of over 60%.

In Abu Dhabi, the index (.FTFADGI), opens new tab was down 1.7% for 2024, posting a second consecutive yearly loss.

Oil prices - a catalyst for the Gulf's financial markets - were on track for a second consecutive year of losses, although they rose on the day after data showed China's manufacturing activity expanded in December.

The Qatari benchmark (.QSI), opens new tab advanced 0.8%, led by a 1% rise in the Gulf's biggest lender Qatar National Bank (QNBK.QA), opens new tab.

However, the Qatari index posted a yearly loss of 3.2%.

Elsewhere, the Kuwaiti index (.BKP), opens new tab was up 4.8% for the year, while the Omani index (.MSX30), opens new tab increased 1.4% in 2024.

Investors will also be watching the U.S. Federal Reserve's rate cut outlook for 2025 after central bank policymakers earlier this month projected a slower path due to stubbornly high inflation.

The Fed's decisions impact monetary policy in the Gulf, where most currencies are pegged to the U.S. dollar.

Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab climbed 1.4%, as most of its constituents were in positive territory including Talaat Moustafa Holding (TMGH.CA), opens new tab, which was up 4.4%.

The Egyptian index ended about 20% higher for the year.

In the previous year, the index gained more than 70%, helped by investors hedging against high inflation and a weak domestic currency.