Upbeat Momentum in Oil Market: In the past month, traders have been more interested in oil trading’s quick pace. They liked futures contracts, especially for the six most popular crude oils and fuels. This high demand is because purchasers stopped caring about China’s needs when they heard Saudi Arabia and Russia would keep decreasing their daily oil supply by 1.3 million barrels.
However, hopeful bets have increased, worrying some analysts. John Kemp, a renowned market specialist, thinks oil prices may need to be “corrected.” Kemp’s latest report on big banks’ oil trades contains terrifying numbers. Last month, traders acquired 183 million barrels of oil and fuel futures. They received 525 million barrels. The ratio of positive to negative bets has reached an alarming 8:1.
Kemp’s view is one perspective. Some think oil prices will climb. JP Morgan predicts Brent crude oil prices might reach $150 per barrel. According to commodity experts, Brent might get $100 per barrel by year’s end.
Strong physical oil demand and Russia’s decision to cease shipping diesel and gasoline have stabilized the oil market. In their latest research, ING’s Warren Patterson and Ewa Manthey stated these things have kept Brent above $93 per barrel.
However, some analysts fear this delicate balance could be upset sooner than expected. A recent report suggested that increased interest rates may deter oil buyers. This could happen when the non-OPEC oil supply rises. Russia may obtain more oil, changing the game.
Also Read: Oil Prices Surge Supply Concerns: An In-Depth Analysis of the Markets Latest Upheaval
All of these issues are known to Federal Reserve Chairman Jerome Powell. He has warned that these changes could harm consumer spending and inflation. Thus, the situation must be monitored.
Energy prices affect everything, so watch them. The Federal Reserve has struggled to reconcile recession risk with economic growth for months. They risked rising interest rates to keep the U.S. economy going.
This raises prices for everything, but people still want oil. Morgan Stanley experts think high prices must stay high before affecting core prices.
The U.S. is the centre of attention for non-OPEC oil source expansion. Occidental Petroleum CEO Vicki Hollub said the business has no intentions to reduce oil production despite oil prices at $90 per barrel. They merely want to make more money in a stable market over time.
Since there isn’t enough oil and inflation affect spending, oil demand may decrease. Things will likely change shortly. Saudi Arabia and Russia know how difficult it is to raise prices without letting them go too high as OPEC members. The global oil market is terrible and getting worse.
Our Reader’s Queries
What is the oil industry outlook for 2024?
Our analysis predicts that the Brent price will rise from $78/b in December 2023 to an average of $83/b throughout 2024. We anticipate a peak in the mid-$80/b range by the end of 1Q24, which is approximately $10/b higher than the futures contracts for delivery during that period. Our STEO forecast runs have closed, and we are confident in our projections.
What is the outlook for the oil industry?
The global oil and gas industry is expected to maintain its performance in 2024, with projections indicating that it will remain consistent with 2023 and stronger than mid-cycle levels. This is due to the continued high and stable oil prices, which are supported by OPEC+’s curtailments, a geopolitical premium, and a slowdown in US crude production. These factors are expected to contribute to a positive outlook for the industry in the coming year.
What is the oil demand in 2023?
Despite the projected increase in world oil demand by 2.3 mb/d to 101.7 mb/d in 2023, the weakening macroeconomic climate is expected to have a significant impact. The latest forecast shows a downward revision of almost 400 kb/d in global 4Q23 demand growth, with Europe accounting for more than half of the decline.
What is the projection for the oil and gas market?
The United States is set to achieve a new milestone in the export of crude oil and petroleum products. It is projected that by 2024, the country will export almost 2.0 million barrels per day, surpassing the current figure of 1.8 million b/d. This growth is attributed to the rise in production of crude oil and hydrocarbon gas liquids in the U.S. market.