Oil Price Forecast - Oil Prices Steady at $60 After Fed’s Third Rate Cut of 2025

Oil Market Analysis — December 9, 2025: WTI (CL=F) Steadies at $58.92 as Fed Cut, Peace Talks, and Supply Glut Define Market Outlook

Fed’s Third Rate Cut of 2025 Shifts Global Oil Sentiment

Oil prices stabilized Tuesday as investors positioned ahead of the Federal Reserve’s expected 0.25% rate cut, the third reduction this year, signaling a shift from tightening to cautious easing. The move, anticipated with 90% probability according to CME FedWatch, aims to cushion slowing economic activity without reigniting inflation.
WTI crude (CL=F) trades at $58.92, while Brent (BZ=F) holds around $62.52. Both benchmarks remain under pressure from persistent oversupply, yet sentiment improved slightly on expectations that lower U.S. rates could support global demand in early 2026.

Markets interpret this week’s decision as a “hawkish cut”—a dovish gesture framed by caution. Fed Chair Jerome Powell is expected to emphasize that with policy rates now near neutral, further cuts would depend on labor market weakness or financial tightening. For oil, the message is nuanced: cheaper capital supports consumption and refinery margins, but a restrained Fed caps speculative enthusiasm.

Tight Range Trade Reflects Uncertain Macro Tone

After Monday’s 2% decline, crude rebounded marginally. Traders remain cautious as Russia-Ukraine peace negotiations and a potential policy recalibration in Washington dominate near-term direction. Brent fluctuates between $61.50–$63.50, while WTI consolidates within $58–$60. Iraq’s full restoration of output at Lukoil’s West Qurna 2—adding nearly 480,000 barrels per day—continues to weigh on prices.
Market participants expect volatility to spike once the Fed statement is released, especially if Powell signals further accommodation in 2026 projections.

Divergent Analyst Views: Monetary Tailwinds vs. Supply Gravity

Analysts are split on whether the Fed’s easing can materially shift oil’s trajectory. Kelvin Wong of OANDA noted that “if the IEA confirms record surpluses, even a dovish Fed may not offset downward pressure.” He projects WTI testing $56.80–$57.50 if inventories continue to climb.
Conversely, Phillip Nova’s Priyanka Sachdeva believes a 25bps cut could “lend short-term support near $60–$65,” especially if the dollar weakens further. The DXY Index, down nearly 2% since October, enhances crude’s affordability for non-U.S. buyers, offering a modest cushion against oversupply.

IEA and EIA Data Reinforce Surplus Outlook

The International Energy Agency (IEA) is set to release its December report projecting a record global surplus in 2026, driven by rising non-OPEC+ output and subdued demand. The EIA’s Short-Term Energy Outlook aligns, forecasting Brent averaging $55 and WTI $59 next year as inventories continue building.
Despite China’s strategic stockpiling—estimated at 80–90 million barrels since August—analysts say the structural glut persists. The IEA expects total supply to exceed demand by 1.7 million barrels per day in Q1 2026, forcing refiners to curb utilization rates.

OPEC+ Caught Between Stability and Relevance

OPEC+ remains defensive after its November meeting produced no new cuts. With Brent sliding toward $60, members are informally debating an emergency 1 million barrel-per-day production reduction if the Fed-induced demand boost fails to materialize.
However, compliance remains patchy: Nigeria and Angola continue to exceed quotas, while Russia quietly reroutes sanctioned barrels through Asia. The alliance faces diminishing leverage as U.S. shale output holds near 13.4 million bpd, matching pre-2020 highs.

Technical Landscape: Fed Cut Sets Range Floors

On charts, WTI (CL=F) finds critical support at $57.80, reinforced by long-term Fibonacci retracements. Resistance aligns at $60.50, where both the 50-day EMA and descending trendline intersect. For Brent (BZ=F), the $64–$65 region remains a ceiling; a close above $65.20 could trigger short-covering rallies, though the broader trend remains sideways.
Volume data suggest algorithmic buying near support levels, reflecting expectations that Fed easing could stabilize macro liquidity rather than drive a rally.

Demand Outlook Weakens Despite Monetary Easing

Macro data confirm fragile consumption trends. China’s PMI at 49.5 signals contraction, while Germany’s industrial production continues to contract. These two economies alone represent roughly 25% of global oil import growth. The IEA now forecasts demand growth slowing to 0.9 million barrels per day in 2026, down from 2.2 million two years earlier.
India remains the outlier: fuel demand rose 5.8% in November, reaching a six-month high. However, its impact is insufficient to offset sluggish OECD and Chinese consumption.