Friday 22 Nov
Oil prices have remained relatively steady as concerns about weakening demand forecasts offset the anticipated impact of an interest rate cut by the Federal Reserve. Brent crude traded near $73 a barrel, following a 1.6% increase on Monday, while West Texas Intermediate crude topped $70.
While there is uncertainty
surrounding the extent of the Federal Reserve's monetary easing, many market
participants anticipate a half-percentage point rate cut at the upcoming
meeting. Lower interest rates are generally seen as a positive factor for
energy demand.
The global economy will see a
shift this week as the US begins a cycle of interest rate cuts, while central
bankers from Europe to Asia determine their monetary policies.
Oil prices have declined by
approximately 14% this quarter, driven by concerns about an economic slowdown
in China, the world's largest crude importer, and a surplus of oil supply.
Commodity trading advisor positions, which follow price trends, have approached
the maximum for short-term positions, according to EA Quant Analytics,
potentially easing recent selling pressure.
Warren Patterson, head of
commodities strategy at ING Groep NV in Singapore, indicated that the market is
uncertain about the magnitude of the upcoming interest rate cut and that
investors are likely to adjust their positions in anticipation of the decision,
potentially supporting oil prices. Additionally, concerns about Libyan oil
supplies continue to influence the market.
The Organization of the Petroleum
Exporting Countries (OPEC) has revised its forecast for global oil demand
growth in 2024 downward for the second consecutive month.
In Europe, major oil refineries
are reducing crude processing rates, contributing to downward pressure on oil
prices. Additionally, the region is facing competition from a newly operational
large refinery in Nigeria.
Time spreads for different oil futures contracts exhibit a mixed outlook. The gap between the nearest two Brent contracts has widened slightly in a backwardation, but it remains below last month's level. The most recent backwardation was 61 cents a barrel, compared to 81 cents approximately a month ago.
