Pressure on oil prices declines on market sentiment...a sudden increase in US inventories

2023-12-22 00:24:22

Crude oil prices faced downward pressure due to a sudden increase in US crude oil inventories, at a time when the challenges of achieving a balance between oil prices appropriate for industrial recovery, enhancing investments, and stabilizing the global economy are increasing.
Specialists told Al-Eqtisadiah, “OPEC+ is actively seeking to balance the market, so it decided last November 30 to reduce oil production by one million barrels per day, starting in January 2024.”
The specialists suggested that Brazil would not limit its oil production despite its joining the “OPEC +” group from the beginning of the new year, pointing out that OPEC manages the supply efficiently and also wants to maintain or increase its share of global oil production and the volume of exports, and that it will not allow it to lose much of its share in The market because this disrupts its ability to influence the market.
In this context, Andrew Morris, director of Bowery International Consulting, said, “OPEC+ production cuts extending until the end of the first quarter of the new year or perhaps longer are being resisted by a new boom in shale oil production in the United States.” “This reduces efforts to support prices.”
He pointed out that the OPEC+ alliance repeatedly confirms that it does not primarily target prices, and that the presence of a number of influential producers from outside the alliance makes it difficult for any party to impose authority over pricing.
For his part, Andre Grossi, director of the German company MMAC, believes that OPEC+’s continuous and flexible oil production cuts ultimately lead to drying up some of the excess supplies.
He noted that most expectations are in favor of the OPEC+ alliance reducing production again next year.
For his part, Mufid Mandara, Vice President of the Austrian energy company LMF, said that the increase in US crude inventories resisted the continued pace of oil gains, as government data revealed a large accumulation in US inventories and record US production, which increased ongoing concerns about an increase in US oil stocks. the offer.
He pointed out that US oil stocks in the main storage center in Cushing in the state of Oklahoma remained at their highest levels since August, which put pressure on prices, pointing to CEBC’s confirmation that market deals are short and sentiment is not good and that bears will not abandon their hypothesis that… “The market will be balanced with increased supply next year.”
Winnie Akello, an American analyst at African Engineering International, agrees that the market may be volatile as the New Year holiday approaches and with the decline in trading activity, noting the calm pace of gains after the thaw in US-Venezuelan relations, which further reduced the risk premium and reduced the possibility of a return. Imposing sanctions on Venezuela.
She pointed out that the prevailing sentiment in the crude oil market is bearish, as investors still do not expect OPEC+ to tighten production on a large scale in the next quarter, given the increase in production in the United States, Guyana and Brazil. US oil prices have fallen by about 8 percent since the beginning of the crisis. This year.
On the other hand, with regard to prices, oil prices fell during yesterday’s trading, amid a sudden increase in US oil inventories, and prices are heading according to those losses to end a series of gains that lasted for three days.
Data from the US Energy Information Administration showed US oil inventories rose by 2.9 million barrels in the week ending December 15, recording 443.7 million barrels, which was contrary to expectations of a decline of about 2.3 million barrels.
The data also revealed that US crude production rose to a record level of 13.3 million barrels per day last week.
In a separate context, the coalition that imposes a price ceiling on Russian oil, led by America, revealed changes in its commitment system, amid assurances that these changes will make it difficult for Russian exporters to exceed this ceiling.
As for the repercussions of the current disturbances in the Red Sea on oil supplies, analysts said, “The impact is limited so far, because the bulk of Middle East crude is exported through the Strait of Hormuz.”
Meanwhile, Advisor Naohiro Nimura, a partner at the research and consulting company Market Risk, said that given the lack of additional production cuts by OPEC+ this year, oil prices will likely remain in that range until the end of the year.
In terms of trading, Brent crude futures fell by about 0.49 percent to $79.31 per barrel. US crude contracts also decreased by 0.53 percent, recording $73.84 per barrel.
The OPEC crude basket rose and its price reached $81.24 per barrel on Wednesday from $79.19 per barrel the previous day. The daily report of the Organization of the Petroleum Exporting Countries (OPEC) said yesterday, “The price of the basket, which includes the average prices of 13 crude oils produced by the member states of the organization, achieved the fifth rise in a row, and that the basket gained about eight dollars compared to the same day last week, when it recorded 73.91 dollars per barrel.” “.