The last time we took the pulse of the oil market the American bank JP Morgan did not have good news for the producing countries. The latter has reason to smile again after the rise in crude oil prices yesterday, Saturday, December 16, and especially the forecasts that go with it. The UN Climate Conference (COP28) in Dubai nevertheless produced a final document on a transition without fossil fuels. This will remain wishful thinking, at least in the medium term…
After consecutive drops, oil prices are recovering, to the great joy of Algeria, Saudi Arabia, Russia, and all the others – we must not forget the world’s leading producer, the USA. It is precisely the latest decision of the American Federal Reserve (Fed) on monetary policy which has excited the markets with the rate reduction from next year. Forecasts of rising demand in the coming weeks also boosted prices.
Yesterday, Saturday, December 16, oil prices changed significantly. A barrel of Brent, the benchmark for Algerian oil, was trading at USD 76.95. At the same time, American West Texas Intermediate crude was sold at 71.79 USD. Prices “received some much-needed support, poised to end a seven-week decline streak“, boosted by the Fed and “market forecasts for a policy change in 2024“, confides an analyst at Exinity.
The Organization of the Petroleum Producing Countries (OPEC) confirms its forecasts for growth in oil demand for the end of 2023 and 2024 in its December monthly report. OPEC explains the erosion of oil prices by “exaggerated concerns about growth in oil demand”. Consequently, it maintains its forecasts at 2.5 million barrels per day (bpd), counting on “global economic growth of 2.9% this year and 2.6% for 2024”.
“Oil demand is expected to be supported by resilient global GDP growth, amid continued improvement in economic activity in China” for the end of the year, says the organization. It predicts “continued improvement in economic activity, stability in manufacturing and transportation activities, mainly in China, other Asian countries and the Middle East, as well as that in India and Latin America, should represent the bulk of oil consumption”.
Moreover “economic growth observed during the first three quarters of this year, in most key economies, was better than expected”. On this occasion, OPEC’s forecasts were corroborated by the International Energy Agency (IEA), which revised its estimates of oil demand for 2024. This increase will rise to 130,000 barrels/ j in comparison with previous forecasts, specifies the agency.
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