11.12.202500:37 Forex Analysis & Reviews: Oil-Dollar: The Fed, Inventories, and Geopolitics

Investor focus on Wednesday was on the Federal Reserve's interest rate decision and the subsequent press conference. A 0.25% interest rate cut is already priced in. However, market participants remain on alert, awaiting new hints regarding the Federal Reserve's future actions.

Meanwhile, oil market participants are assessing the data from the US Energy Information Administration (EIA) report, released on Wednesday.

The EIA reported a reduction in US oil inventories of -1.812 million barrels in November, exceeding forecasts of -1.200 million barrels (after an increase of +0.574 million in October). However, this data did not have a positive impact on oil prices.

Oil prices experienced a period of volatility, as the initial upward trend soon weakened under the influence of mixed factors. The positive impact initially came from fresh API data, which showed an unexpected reduction in US fuel inventories of -4.8 million barrels, compared with an expected decline of only -1.7 million barrels. However, the rapid price recovery is constrained by the likelihood of resolving the Ukrainian crisis, which could ease sanctions on Russian energy and potentially increase global supply.

The EIA updated its short-term energy outlook, stating that US crude oil production will reach a historic high of 13.61 million barrels per day by 2025. This figure slightly exceeds the previous forecast of 13.59 million barrels per day. Despite this optimism, the agency anticipates a slowdown in production growth next year, as low oil prices and reduced drilling activity will pressure the sector. According to the new forecast, production in 2026 will drop to 13.53 million barrels per day, down from the previous expectation of reaching 13.58 million barrels per day.

The initial rise in oil prices yielded to a decline due to the clash of several opposing factors.

On the one hand, the market was supported by data from the American Petroleum Institute (API) weekly report: fuel inventories fell by 4.8 million barrels, while a decline of only 1.7 million barrels was anticipated.

On the other hand, the risk of geopolitical de-escalation hangs over the market. The likelihood of resolving the Russia-Ukraine conflict and subsequent lifting of sanctions against the Russian energy sector could sharply increase oil supply and exert downward pressure on prices. This factor currently limits the potential for oil price growth, despite positive inventory data.

Additional guidance is provided by the OPEC Monthly Oil Market Report (MOMR), which analyzes demand, supply, and balance in the global oil market while forming a forecast for the upcoming year.

Key Takeaways from the November 2025 Report:

• OPEC maintained its growth forecast for global oil demand in 2025 at +1.30 million barrels per day, bringing it to 105.14 million barrels per day.
• Global demand is expected to rise by +1.38 million barrels per day in 2026, reaching 106.52 million barrels per day.
• However, the demand forecast for OECD countries for 2026 has been revised downward by 10,000 barrels per day.

On Thursday, the next OPEC oil market report will be published, around which oil market movements are likely to occur in the coming days.

Conclusion

The oil market remains under the influence of mixed signals — current inventory data offers reasons for short-term optimism, while geopolitical risks and the potential for a medium-term supply increase hinder growth. Further comments from OPEC and accompanying statements from the Fed will act as additional triggers for prices in the remaining days of the year.