Oil prices ended their brief three-day rally on Friday, with traders reacting to signs of de-escalating tensions between Russia and Ukraine, which triggered a decline in crude futures. West Texas Intermediate (WTI) dropped by 2.4%, closing just above $67 per barrel, the lowest level since September. Brent crude settled just over $71 per barrel. WTI ended the week nearly 5% lower, driven by steep losses at both the start and end of the week.
The downturn was fueled by reports suggesting possible progress in ceasefire talks in the Middle East, which added bearish pressure to an already pessimistic market outlook for 2025. This overwhelmed minor gains made midweek, leading to the significant overall drop in prices.
In Ghana, prices may drop or stay the same at the pumps in the coming days. Chamber of Petroleum Consumers is predicting prices could drop by up to 5%. The cedi has made some gains in recent days while globally, prices have not escalated that much. However with some product uncertainty on the Ghanaian market, some oil marketing companies may keep their price unchanged while the direction of the market.
On the global scene on Friday, traders reacted to news that Ukraine is calling for stronger efforts to push Russia toward peace, though Ukrainian President Volodymyr Zelenskiy expressed doubt that peace talks between Germany and Russia would lead to meaningful progress. Should peace talks advance and the war eventually end, oil prices could be further pressured as shipping costs decline, and Europe might resume accepting Russian oil, industry insiders noted.
“Everyone’s looking for a reason to sell or go short,” commented Rebecca Babin, senior energy trader at CIBC Private Wealth Group.
Adding to the bearish sentiment was fresh data from China, which revealed a year-on-year decline in oil consumption, exacerbating concerns over weakened demand in the world’s largest oil importer. OPEC further slashed its demand forecast for the fourth consecutive month, while the International Energy Agency (IEA) warned of a potential 1 million barrels-a-day surplus in 2025.
The rising strength of the US dollar also weighed on oil prices. The dollar index reached a two-year high following Donald Trump’s re-election victory, making oil more expensive for holders of other currencies. Additionally, reports from CNN that Hezbollah was considering a ceasefire proposal to halt Israel’s military offensive in Lebanon further deflated risk premiums associated with geopolitical tensions in the region.
Oil prices have fluctuated between gains and losses since mid-October, influenced by Middle Eastern conflicts, oversupply fears, and currency market shifts. Year-to-date, WTI has fallen by more than 6%, after hitting its lowest level since 2021 earlier in September.
With the combination of reduced demand, oversupply fears, and easing geopolitical risks, the outlook for the oil market remains uncertain as the year draws to a close.
