2023-12-13 07:22:45
Oil prices fell by regarding 1% during today’s trading, Wednesday, December 13, 2023, continuing to hemorrhage losses for the second session in a row amid indications of increased supplies and fears of an economic recession that may limit demand.
The US Energy Information Administration reduced expectations for global oil demand in 2024, while data from the US Bureau of Labor Statistics showed that the consumer price index rose 0.1% last month, following it remained stable in the previous October, contrary to the expectations of analysts who are likely to maintain the index. Unchanged during November.
Oil prices ended their trading yesterday, Tuesday, December 12 (2023), with a decline of regarding 4%, with the issuance of new American forecasts regarding demand and prices in 2024, and investors awaiting the decisions of central banks.
Oil prices today
By 06:51 AM GMT (09:51 AM Mecca time), futures contracts for benchmark Brent crude, for February 2024 delivery, fell by 0.90%, to $72.58 per barrel.
At the same time, US West Texas Intermediate crude futures, for delivery in January 2024, fell by 0.86%, reaching $68.02 per barrel, according to figures monitored by the specialized energy platform.
The US Energy Information Administration reduced oil price forecasts in 2024, even with voluntary cuts by OPEC+ countries, and also reduced its estimates for crude production in the United States.
The average price of West Texas Intermediate crude oil is expected to reach $78.07 per barrel during 2024, a decrease of 12.5% from the November 2023 estimate of $89.24 per barrel.
The Energy Information Administration also reduced its estimates for the average price of Brent crude by 11.4%, to reach $82.57 per barrel during 2024, according to a report. Energy Horizons Short-term for December 2023, issued yesterday, Tuesday, December 12, 2023.
Oil price analysis
The oil market faltered in evening trade on Tuesday, as US inflation readings came in stronger than expected for November, reinforcing the view that the Federal Reserve is unlikely to cut interest rates early next year, which would impact consumption.
Meanwhile, ANZ analysts said the weekly average of Russian crude exports jumped to the highest level since July, exacerbating fears of oversupply and casting further doubt on the latest production cut agreement by the Organization of Countries. Oil exporter OPEC and its allies, known as the OPEC+ alliance.
An oil tanker passes near New York Harbor – Photo from Archyde.com
The US Energy Information Administration also raised its supply forecast in 2023 by 300,000 barrels per day to 12.93 million barrels per day from its previous report, in its latest report on short-term energy expectations.
The bearish forecasts put oil on track to continue declining during the week, continuing the prevailing trend with 7 consecutive weeks of declines.
Market analyst at CMC Markets, Tina Teng, said that the policy meeting held by the US Central Bank, which concludes later today, Wednesday, will determine the direction of the markets.
She added: “The tougher-than-expected stance by the Federal Reserve may cause a further decline in crude oil prices,” she said. Archyde.com.
The Fed is widely expected to keep interest rates unchanged, however, investors will focus on Fed officials, their views on the economy and where they see interest rates in the coming quarters.
DBS analyst Suvroo Sarkar said the Fed’s discussions were unlikely to raise any surprises and that prices might recover to some extent following the meeting results were revealed.
Geopolitical tensions
The United Nations on Wednesday approved a resolution calling for an immediate ceasefire in Gaza, with US President Joe Biden warning that Israel was starting to lose international support due to civilian deaths.
The cost of shipping through the Red Sea is also rising as Yemen’s Houthis intensify attacks on ships they believe are linked to Israel, with industry sources warning of disruptions to global shipping in the region.
The Iran-aligned group attacked ships in vital shipping lanes and launched drones and missiles at Israel, more than 1,000 miles away from its headquarters in the Yemeni capital, Sanaa.
This coincides with the COP28 climate summit entering the final hours of negotiations on Wednesday morning, as governments continued to debate the future of oil and other types of fossil fuels.
Former Chinese Vice Foreign Minister Liu Zhenmin said on Wednesday morning that some sticking points remained, following the draft agreement on Monday came under criticism for failing to call for the phase-out of fossil fuels.
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