After seven consecutive weeks of decline, both crude benchmarks experienced modest gains last week. The positive movement followed the Federal Reserve meeting, where indications were given that there would be no further interest rate hikes in the coming year.
The sustained decrease in oil prices over the past seven weeks contributed to a decline in wholesale fuel prices, according
to the RAC. Currently, average fuel prices are at their lowest, resembling figures not observed at UK forecourts since October 2021.
On Monday, crude oil prices saw a 1% increase, driven by concerns about oil supply disruptions due to Houthi attacks on ships in the Red Sea. Additionally, Russia’s plan to lower exports in December provided further support to the market. With its latest announced cuts for the first quarter of 2024, the OPEC+ alliance is trying to keep tight control over the global oil supply.
OPEC+ production is projected to decrease by 400,000 barrels per day, resulting in the alliance’s market share dropping to
51% in 2023 – the lowest since its establishment in 2016. It is evident that OPEC+’s management of the oil market will play a crucial role in determining where prices go next year.
Given the heightened geopolitical risks, the possibility of oil prices reaching $100 a barrel in 2024 cannot be dismissed.
Notably, oil futures prices are in contango until the middle of next year, indicating the collective expectation among traders, investors, and producers that prices will continue to rise.