Oil Swings as Supply Risks Counter China Weakness, Strong Dollar

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(Bloomberg) -- Oil edged higher, paring recent losses, with traders weighing short-term supply risks against further signs of Chinese economic weakness and a stronger dollar.

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Brent futures traded above $76 a barrel, after declining more than 1% in the previous session and sliding lower at the start of trading on Thursday.

Chinese consumer inflation fell further toward zero, a setback for government efforts to revive demand. Recent strength in the US dollar has also made commodities priced in the currency — including oil — less attractive to some buyers.

Still, crude has had a strong start to 2025, supported by dwindling inventories in the US and risks to Iranian supply in a second Donald Trump presidency. Cold weather is expected to boost demand for heating fuels this month, and Russia’s seaborne crude exports recently slumped to their lowest since August 2023.

For the year, however, there’s still concern that supplies may exceed demand.

“The outlook is slightly bearish,” Viktor Katona, head of oil analysis at consultancy Kpler, said at the online Gulf Intelligence Outlook Forum. “We’re not going to see demand growth above 1 million barrels a day at any point in the future. With the China that we currently have, it’s not going to happen. The slowdown is evident.”

Standard Chartered PLC has cut its 2025 Brent crude forecast by $5 to $87 a barrel, and lowered its first-quarter estimate by $7 to $82.

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