The worst week for the global oil market is coming to an end. The industry has not experienced such disappointment since March of this year. Commodity prices dropped significantly this week, falling by at least $10 per barrel under pressure from various fundamental factors. None of them could be ignored. The situation is described by OilPrice expert Michael Kern.
First came data about a sell-off in US bonds, which worsened the economic outlook and forecasts for 2024. And then the energy market took another hit from data from the International Energy Agency (EIA), which revealed a sharp drop in gasoline demand around the world and especially in the United States.
The next day of trading will focus on employment data in the US industrial and business sector, which also does not bode well. In other words, growth of the international ICE Brent brand to triple digits (100 and above) is completely unattainable at the moment. Currently, prices fluctuate on average at $84 per barrel.
Saudi Arabia is sticking to its general strategy of cutting production and is now likely to continue reducing production under the weight of circumstances and lack of choice. The time for rejoicing quickly passed for Riyadh. There may also be some problems for such a large supplier as Russia. A significant decline in international prices affects the discounting of its sanctioned oil, which brings the G7 price ceiling back into play.
Analysts have noticed a return to the market of trends that ruled in the 70-80s of the last century. The then instability in the market and the volatility of quotes could only be suppressed with the help of serious political upheavals and conflicts. This year, a kind of “trend” has returned. A combination of geopolitical factors, far from pure economics, has changed the course of events in the global industry, which some time ago was influenced only by Russia and Saudi Arabia.
Whether this is good or bad, time will tell. The main thing is that the deterioration of the political situation does not go too far, when humanity may not need oil or other energy resources at all, some experts express concerns.
2023-10-13 05:34:16
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