2024-02-15 14:58:08
The image of the yoyo represents the evolution of oil prices quite well since the start of the year, since the barrel of Brent alternates weeks of rise and fall. It must be said that financiers must deal with several catalysts, which sometimes weigh on prices, sometimes pull them.
Let’s start with the bullish factors. They are made up of the strike force of OPEC+ to reduce the production of its members. These voluntary reductions should expire in March and might be renewed in order to bring prices towards the threshold of 90 USD, the ideal level for OPEC. Still on the supply side, the US Energy Agency estimates that US production should peak in 2024, at around 13.3 million barrels per day (mbd). On the demand side, OPEC still expects marked growth in 2024 with an estimate of 104.4 mbd. Finally, the geopolitical context remains uncertain in the Middle East, more particularly in the Red Sea, where the Houthis are disrupting an essential supply route to Europe.
Against these bullish elements, there are the forces at play which justify cheap oil. If OPEC is optimistic regarding the evolution of global demand, the market has a different vision, biased by the Fed’s caution in reducing its interest rates soon. US inflation in January, which did not slow down as expected, adds a little more weight to this scenario which also favors an improvement in the US dollar. The market also doubts OPEC’s ability to sustainably maintain its production cuts since certain members are struggling to meet their objective, such as Iraq for example.
Graphically, buyers and sellers are passing the buck between 76 and 84 USD. The indecision continues and we will have to get out of this box which encloses the prices to record either a reversal of the trend (towards 90 USD), or a continuation of the downward movement initiated in September 2023, towards 72 USD.
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