US crude has fallen more than 10 percent this year as a result of negative sentiment related to weaker demand and record production outside OPEC.
The February contract for West Texas Intermediate (WTI oil) fell 0.17 percent on Friday to end at $71.65 a barrel. fat friday. The Brent contract fell 0.14 percent and ended at $77.04 a barrel. barrel.
CNBC writes that US crude oil and the global benchmark posted the first annual fall in price since 2020, despite the geopolitical risks seen in the Middle East and the conflict in Gaza. This year, WTI oil has fallen 10.73 per cent, while Brent is down 10.32 per cent.
Oil prices rose nearly 3 percent earlier this week on concerns that militant attacks on ships in the Red Sea would disrupt global trade and crude oil shipments. Although there is a latent risk and fear of conflict escalation that has triggered small rallies in prices, in 2023 traders have focused mostly on the balance between supply and demand.
“If you look at the oil curve now, we are in contango. It is negative for the market, because it tells us that the market is not tight enough,” said hedge fund manager Tor Svelland recently to Finansavisen.
Record high American production
The US is producing oil at a record pace, and it is estimated that they pumped up 13.3 million barrels every day last week. Production is also record high in countries such as Brazil and Guyana. At the same time, production outside OPEC has collided with economic decline in large countries, such as China.
OPEC and allied countries have promised to reduce production by 2.2 million barrels per day. day in the first quarter of 2024, but traders do not seem to have confidence that this will be enough to balance the market.
The IEA believes that oil production outside OPEC, especially the US, is expected to more than cover demand growth in 2024. Global oil demand growth is expected to fall by half to 1.1 million barrels per year. day next year, while production outside OPEC is expected to grow by 1.2 million barrels per day.
Morgan Stanley believes $80
The shift in crude oil supply from the Middle East to the US and other countries on the Atlantic Ocean has a “profound impact on the global oil trade”, according to the IEA.
The United States accounted for two-thirds of the growth in non-OPEC supply this year, challenging Middle Eastern producers’ attempts to defend their market share and boost oil prices.
OPEC appears to have little influence, with production cuts not being heard. Brazil has joined OPEC, but it is unclear what this means for the markets.
Occidental CEO Vicki Hollub told CNBC that this year’s production in the US reached surprising levels. She advised the industry to be careful not to add too much supply to the market.
The Occidental CEO and Morgan Stanley expect U.S. crude oil prices to rebound next year, averaging around $80 a barrel. barrels for WTI. Wells Fargo has a lower forecast with an average of $71.50 per share. barrel.
2023-12-30 14:15:15
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