Oil prices have declined for seven consecutive weeks, according to CNN analyst Nicole Goodkind. U.S. oil contracts recorded their seventh straight decline on Friday, marking the longest losing streak in five years.
Continuous Decline
The ongoing decline comes amid analysts’ concerns about increased production worldwide and OPEC’s disregard for its promises to cut supplies. OPEC+, which includes Russia and other OPEC allies, agreed to cut oil production by 2.2 million barrels per day during the first quarter of 2024, but markets do not believe all members will comply.
Decrease in Oil Demand
Markets are also worried about an anticipated drop in crude oil demand, particularly in China, where there are ongoing signs of economic weakness. Fuel prices in the U.S. are falling to an average of about $3.19 per gallon. This represents a decrease of about 22 cents from last month and 14 cents from last year.
Analysis from Oil Experts
Before the Bell spoke with Jim Mitchell and Corey Stewart, oil experts at LSEG, to gain a better understanding of the dynamics driving oil prices down. This dialogue has been edited for clarity on the key information.
Importance of Declining Oil Prices
Oil markets are among the largest trading markets and are influenced by various factors. Oil is also considered a currency, funding many countries’ economies. Therefore, the decline in oil prices for seven consecutive weeks is of significant importance.
Impact of OPEC+ Decisions
Prices were above $90 per barrel just a few months ago, leading to much incentive for other countries, including the U.S., to increase energy production. Now we see record production in some parts of the U.S., making it harder for OPEC to implement some tactics it previously used to restrict supplies and raise prices. It won’t work.
Shift in Oil Production Centers
When discussing everything happening geopolitically and the shift in crude oil production centers, does it seem we are approaching a significant power shift in the market? Mitchell stated, “I have been in this industry for a long time, and every day is critical; sometimes the general public is aware of it, and sometimes they are not.” Considering our global position in terms of GDP and some fractures in the global economy, this is a critical moment.
Impact on Oil Demand in China
It has been difficult to obtain information from China in recent years. We are a very large data company: we have an office in Singapore, and we have oil and product analysts in China and other Southeast Asian countries, and even then, it is hard to get demand information from China. However, there are some interesting developments. Refining capacity in China continues to increase, reaching about 15.5 million barrels per day. The U.S. is at about 17.7 million barrels, and China is likely to surpass the U.S. in the coming years.
Impact of China’s Gasoline Exports
When China starts shipping a lot of gasoline, we must consider the impact on prices. Previously, China’s policy was to keep everything domestic. However, we have seen more and more exports, which are affecting prices. Recently, concerning crude oil market demand, there have been some variations. Last month, imports decreased by about 10% compared to the previous month, and there is a 9.3% drop year-on-year. We see a decrease in crude oil demand in China.
Oil Price Forecasts for 2024
It is expected that
Stuart said that the first year will start with slightly lower prices. If we see a weak economy, it will affect demand and lower prices. But generally, if we look only at history, we have seen growth in demand for oil almost every year.
Source: https://www.aol.com/oil-prices-falling-seven-weeks-123426412.html
Leave a Reply