Brent rose above $80/bbl due to a significant 22.3 mbbl drawdown in US commercial crude and products inventory, China’s economic stimulus measures, and strong 2H23 US economic data, signalling a likely soft landing.
Oil prices in 2024 are expected to remain volatile due to concerns on both supply and demand.
Supply disruptions including US North Dakota production drop from extreme weather, Libya’s major oil field shut by protesters blockade and the disruption of the Red Sea shipping route due to Yemen Houthi’s attacks are factors adding volatilities.
Demand uncertainties stem from the Chinese economy, Federal Reserve interest rate decisions, the prospect of a soft landing for the US economy and the ongoing Israel-Hamas and Russia-Ukraine conflicts.
The election year with new leaders elected in Argentina, Taiwan and the approaching elections in Russia and US adds market uncertainty. The latest election in Taiwan likely to keep tension between China and Taiwan high
Despite the IEA raising its 2024 demand growth forecast by 180,000 b/d, OPEC anticipates robust demand growth, primarily driven by strong demand from China’s growing petrochemical sector.
Global production in 2024 is projected to rise by 1.46 mb/d, mainly from non-OPEC sources, with the largest contribution from US LTO and additional output from Canada and Latin America.
Demand growth for 2023 stood at 2.2 mb/d primarily driven by China’s consumption. 2024 forecast is seen at 1.63 mb/d as China demand softening.
Angola’s exit from OPEC reduces the organisation’s global market share. Non-OPEC production growth challenges OPEC+’s efforts, but with expected slower US growth, OPEC is gaining market control and likely to maintain the current agreement through 2024. However, Russia’s crude export data raises doubts about its commitment to OPEC+ cuts.
