TELF AG comments the present and future of the oil market
Usual fluctuations
The slowdown of the global economy and the uncertainty of the social and geopolitical scenarios, combined with the many questions about the stability of the Chinese economy, will have serious repercussions on the general prices of raw materials, in the short and medium term, determining the usual fluctuations that characterize this kind of market. A sector that could be particularly affected by a variety of factors, according to some analysts, is the oil sector.
We are not just talking about the climate of uncertainty that is gathering on fossil fuels (and on the countries that depend on them) as a direct consequence of the global push towards green, which within a few decades should lead to a progressive abandonment of fossil fuels and the their replacement with clean, renewable energy, capable of ensuring very low emissions.
In the third quarter of 2023, according to the EIA, the oil market may record a deficit of 0.6 mb/d and another deficit, albeit slightly lower, in the fourth quarter of this year (from 0.2 mb/d). Another rather surprising prediction, relating to next year, is that the market could find itself in surplus for several consecutive quarters. These estimates, as a natural consequence, would lead to a sharp increase in stocks of crude oil and other petroleum products by OECD countries, at least in the short term.
Other forecasts that arouse some curiosity are those relating to world consumption and OPEC’s overall supply in the coming months: in 2023, world oil consumption should in fact rise to over 10o.0 mb/d, with an increase of almost 2% compared to 2022, while in 2024 it is estimated that this consumption could reach 102 mb/d, which would represent a new record. In a context of this kind, it is also believed that the supply of non-OPEC countries can expand further, going from 67.9 mb/d in 2023 to almost 70 mb/d in 2024. The growth of US production is also expected to increase, but in the latter case the estimates are more contained.
In the fourth quarter of next year, the United States could export more than 2 mb/d, thus recording a clear growth compared to the estimates envisaged for the first quarters of the year until recently. Other very interesting estimates concern oil prices for the coming months: the rally witnessed in September, according to some observers, could lose strength due to various factors, many of which are not directly connected to each other. Among these we certainly remember the pessimistic estimates relating to the deficit expected for the fourth quarter of 2024, the aggressive cuts made by OPEC+ (which would have acted as a sort of additional stimulus to the sudden increase in prices).
Between the end of 2023 and the beginning of 2024, due to fears of recession, the risk of downward prices could materialise, with an unfavorable situation for crude oil prices for the whole of 2024. This forecast, according to many observers, would sink its roots in the economic slowdown in Europe and China, but also in inflationary pressure and the persistence of extremely high interest rates. In the coming months, the sector will also have to deal with a foreseeable weakening of demand and an excess of supply in physical markets, fueled above all by non-OPEC+ producers.
