The general opolitical tensions that had animated the oil markets since mid-September are gradually dissipating, allowing the market to breathe despite headwinds on the fundamentals front.
It is indeed worth noting the agreement concluded by Ryad with the houthis, which fits perfectly into the Kingdom’s move to find a political solution to the yémerite conflict. Moreover, while the situation remains particularly preoccupying in Iraq, shaken by violent demonstrations, fighting on the Syrian front is losing intensity following the Russian-Turkish agreement to cut off control of the Turkish-Syrian border.
However, not everything is so rosy and operators could now focus more closely on the issue of market supply. OPEC’s latest report is particularly preoccupying in this respect, as the cartel is once again lowering its prospects for growth in oil demand. These forecasts are cut by 600,000 barrels per day, bringing world demand to 103.9 million barrels per day (mbd) in 2023.
On the other hand, supply remains robust despite the efforts made by OPEC+ to contain oil surpluses. The culprit is none other than American production, which again exceeded expectations this year. OPEC expects US supply to reach 16.9 mbpd in 2024, up from 12.0 million mbpd in 2019. The persistence of imbalances should therefore lead the cartel to intensify its efforts, the effects of which are so far mixed, to support world prices. As a result, OPEC oil production is expected to reach 32.8 mbpd by 2024 compared to 35 mbpd this year
The main challenges of the market are thus clearly apparent. It will be a question of questioning the renaissance of the American model, the shale oil industry still being pointed out because of its lack of profitability. The evolution of global demand also remains a notable unknown, bloated due to economic uncertainties and trade barriers
Graphically, in weekly data, neutrality is between 58.25 and 64.6 USD. Over the past few weeks, buyers have appeared near the lower boundary and sellers near the upper boundary of this horizontal accumulation zone. We will thus wait for a closing exit to take position in one direction or the other.