Why oil prices won’t stay low forever
- Oil prices going through a weak patch
- OPEC squabbles over output quotas
- Prices unlikely to stay low for long
- New voluntary restrictions on production announced by OPEC
- Worries about global demand persist
- Limited capacity for non-OPEC countries to increase supplies
- Analysts expect Brent to stay in $80-100 range in 2024
The oil market is currently experiencing a weak patch as OPEC struggles to agree on output quotas. However, experts believe that prices are unlikely to stay low for too long. In recent months, the cost of crude has slipped, with November seeing a decrease of over 5% and October experiencing a 10% drop. This year is set to be the worst for oil prices since 2020, when the Covid-19 pandemic severely impacted energy demand. OPEC’s announcement of new voluntary restrictions on production may have seemed underwhelming, but it reflects the challenges the cartel faces in maintaining unity. Some members want to maximize revenue by keeping output high, despite the fact that all producing nations benefit from strong global prices. Concerns about global demand are expected to persist into the next year, with Deutsche Bank warning of a potential U.S. recession and China still recovering from Covid lockdowns. However, analysts at Goldman Sachs believe that prices won’t drop significantly. OPEC will be able to keep a floor under prices, and non-OPEC countries, such as the U.S., have limited capacity to increase supplies. Goldman analysts predict that Brent crude will remain in the $80-100 range in 2024. Currently, West Texas Intermediate is priced at $75.72 a barrel, while Brent crude stands at $80.46 a barrel.
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Key People: Daan Struyven (Analyst at Goldman Sachs)
Factuality Level: 7
Justification: The article provides some relevant information about the current state of the oil market, including the squabbles within OPEC, the recent decline in oil prices, and the concerns about global demand. However, it lacks in-depth analysis and relies heavily on statements from analysts without providing sufficient evidence or counterarguments. The article also includes some unnecessary background information and does not address potential counterarguments or alternative perspectives.
Noise Level: 3
Justification: The article provides some relevant information about the current state of the oil market and the factors affecting oil prices. However, it lacks in-depth analysis and evidence to support its claims. The article also includes some filler content and repetitive information, which contributes to the overall noise level.
Financial Relevance: Yes
Financial Markets Impacted: Oil markets
Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses the current state of the oil market and the squabbles within OPEC over output quotas. It mentions the decline in oil prices and the concerns about global demand. However, it does not describe any extreme events or their impact.
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