Oil prices slipped on Monday during thin holiday trading, weighed down by concerns over a potential supply surplus in 2025 and a stronger US dollar.

Brent crude futures dropped 31 cents, or 0.43%, to settle at US$72.63 per barrel, while US West Texas Intermediate (WTI) crude fell 22 cents, or 0.32%, to US$69.24 per barrel.

Analysts at Macquarie forecast a growing supply surplus next year, predicting Brent crude prices to average US$70.50 per barrel, a decline from this year's average of US$79.64.

European supply fears eased after reports indicated the Druzhba pipeline, a key route for Russian and Kazakh oil to Europe, resumed operations following a temporary halt caused by technical issues.

The US dollar hovered near two-year highs, further pressuring oil prices. A strong dollar typically makes oil more expensive for holders of other currencies. "With the dollar strengthening, oil prices have lost earlier gains," said Giovanni Staunovo, analyst at UBS.

Last week, Brent and WTI futures fell 2.1% and 2.6%, respectively, as global growth concerns and caution from the US Federal Reserve over easing monetary policy weighed on sentiment.

Despite these challenges, the market remains watchful for further developments in geopolitical tensions and Federal Reserve policies, which could influence crude oil prices in the coming weeks.

Investing.com