Oil Prices Head for Biggest Annual Drop Since 2020

Oil prices are heading for the biggest annual drop since 2020 as war and OPEC+ production cuts failed to propel prices higher in a year dominated by supply growth outside of the grouping. Amrita Sen of Energy Aspects gives her views on what’s ahead for 2024. She says prices could climb to $85 as early as the second quarter.
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I think look the in terms of War premiums agreed there is no geopolitical risk premium in the price right now um and that has much to do with the concept or the notion that demand is weak if anything demand has been growing at over 2 million barrels per day this year I

Mean 2.2 million barrels per day uh next year it should be slowing we are expecting it to slow um given kind of higher interest rates and the lagged effect of that on the economy but it’s still going to grow it’ll be growing by about 1.2 million barrels per day um I

Think the bigger challenge has been a lot of trade and speculators have been badly hit this year because um you know trading hasn’t been easy it’s been very choppy and we just don’t have the confidence in these guys to come back in strong so we need sustained stock draws

We had big stock draws in the doe numbers yesterday uh if we see a continuation of that I do think confidence is going to come back and that’s when you’re going to start to see geopolitical risk premium come back to the market yeah National Stock pars dropped by by 7.1 million barrels but

You still got a an inventory build at kushen so there’s a trigger event isn’t there at the beginning of the year we have these additional voluntary cuts of 900,000 barrels that we spent agonizing days debating whether uh they are robust or not so take us through the cuts that

OPEC plus will implement the SES continue with a unilateral cut of a million barrels so take me through the deficit as you see it for q1 when will it materialize and what size will it be so q1 and even early Q2 I would say the op Cuts mainly go towards offsetting

What would have otherwise and seasonally are bills uh because this is when refineries go down for maintenance right so this is always a weak period for crude oil products will be very strong so gasoline and Diesel um and I think OPC is and particularly Prince abdulaziz

Has been very clear in his views about this that he wants to make sure inventory simply do not build uh we could see a small draw counter seasonal draw and I think really from the latter half of the second quarter once refineries are back from maintenance you’re going to see crew drop very

Sharply in the meantime the product markets will continue to tighten so overall hydrocarbons will actually look tighter it’s just the products markets will be a lot stronger and crude is seasonally in its weakest period anyways OPEC if they manage to keep inventories in check that will be a pretty

Impressive feat because usually you know we build first half and we draw the second half in terms of prices I think again confidence needs to come back so we probably hover around the $80 for Brent in the first quarter I’m not seeing a lot of upside but second half

Or second quarter onwards I do think prices will be in the 80s and probably 85 above