Crude oil is in for a ‘challenging 2024’, says Macquarie’s Vikas Dwivedi

Macquarie’s Vikas Dwivedi joins ‘Closing Bell Overtime’ to talk what’s ahead for crude oil and the energy sector in 2024.

MORE BACK TO OVERTIME. — THE FIRST NEGATIVE YEAR SINC 2020 JOINING US NOW TO DISCUSS WHER OIL GOES NEXT IS VEGAS DO WITH EDDIE. OUR GLOBAL ENERGY STRATEGIST GREAT TO HAVE YOU ON I’M GONNA START RIGHT THERE. WHERE DO WE GO FROM HERE FOR CRUDE? >> MORGAN, WE THINK ROUTE IS

STILL IN FOR A CHALLENGING 2024 THERE WILL BE INEVITABLE RALLIES, BUT THEY WILL BE SORT OF SHORT LIVED WE’RE STILL DEALING WITH TOO MUCH OIL SUPPLY. THERE’S A LOT OF OIL PRODUCTIO GROWTH STILL COMING. OPEC IS FAIR CAPACITY, HIGHE THAN IT’S BEEN IN QUITE SOME TIME AND DEMAND, YOU KNOW, POISED

FOR EITHER BEING NEUTRAL, OR – WITH SOME NEGATIVE REPRISALS >> OKAY, HOW DO YOU GEOPOLITIC PLAYED ALL OF THIS OBVIOUSLY WE SEE ALL THE STRIKES GOING ON, CONFLICT I THE MIDDLE EAST, ISSUES WITH SHIPMENTS MAKING THEIR WAY – ON COMMERCIAL. AND THE REROUTING OF THOSE EVERY TIME YOU GET A REPOR

ABOUT ANOTHER ATTACK, CRUD MOVES HIGHER, BUT SHORT-LIVED. SO, IN TERMS OF GAINING OUT TH RISK, WHAT WOULD AS SCENARIO POTENTIALLY HAVE TO LOOK LIK IN THE MIDDLE EAST TO HAVE MEANINGFUL UPSIDE FOR THE PRIC OF OIL, IN A MORE SUSTAINABL WAY? >> GREAT QUESTION. THIS IS BEEN GOING ON FOR QUIT

SOME TIME. GOING EVEN BACK TO RUSSIA, UKRAINE, WHERE THE RISK IS HIGH, BUT THE PROBABILITY IS VERY LO OF AN ACTUAL DISRUPTION. IT DIDN’T HAPPEN WITH UKRAIN RUSSIA AND IT’S NOT REALLY HAPPENIN NOW. THE RED SEA ISSUES ARE REAL. BUT WE THINK THEY WILL B SHORT-LIVED. AND HERE, TO YOUR EXAC

QUESTION ABOUT WHAT WOULD HAVE TO CHANGE TO MAKE IT A LONGE LASTING EFFECT, TO THE UPSID FOR OIL — EITHER ONE OR THE PRINCIPA NATION STATE ACTORS, YOU KNOW, A COUNTRY WOULD HAVE TO WANT THAT THAT IS AN END GOAL. WE THINK NOBODY REALLY WANTS THAT

IT IS NOT WORTH IT FOR ANY O THE BIG PLAYERS INVOLVED >> OKAY. IN TERMS OF THIS APPLY SIDE OF THE PICTURE, AND THAT YOU SA THAT WE ARE — THE PRICE RIGHT NOW. WHAT DOES IT DO TO THE GLOBA OIL DYNAMIC, FROM A POLICY PERSPECTIVE. OH PACK WE KNOW, PARTICULARL

SAUDI ARABIA HAS BEEN, YOU KNOW, KEEPING PRODUCTION CUTS IN PLACE. BUT THE U.S. IS REELING MORE AND MORE, RECORD OUTPUT LEVELS BRAZIL, RAN BEING PRETTY EXPONENTIALLY HERE OVER TH NEXT COUPLE OF YEARS AND NOW EVEN JUST THIS, WEEK ARGENTINA’S NEW PRESIDENT, SAYING, WE’RE GETTIN GOVERNMENT OUT OF OUR ENERGY MARKET, DRILL BABY DRILL

WHAT DOES THIS DO TO THA SUPPLY SIDE EQUATION IN 2024 >> GREAT, POINT. I THINK IT’S GOING TO KEEP PRESSURING OIL IT WILL BE TOUGH TO GENERATE ORGANIC RALLIES THAT DON’T INVOLVE GEOPOLITICS. WE THINK IT’LL BE SHORT-LIVED. WE THINK THE OTHER PART OF THE GEOPOLITICS IS THE U.S., AND OTHER BIG PLAYERS, CHINA

REALLY ACROSS THE BOARD, YOU KNOW, THERE ARE NOT TENDING TO LET OIL SUPPLY GO DOWN THROUGH ANY OF THEIR OWN POLIC ACTIONS. SO I THINK THAT IS GOING T HELP OIL STAY ON THE LOWER SIDE >> OKAY. SHOULD BE GOOD NEWS FO CONSUMERS. WE KNOW IN A TIME OF FOCUS O

DISINFLATION, GNAT GAS, IT WAS A ROUGH YEAR FOR NATURAL GAS WE’VE BEEN DOWN, WHAT, FUTUR WISE IN THE U.S., DOWN TO TW BUCKS LOWER THAN WHERE THE PRICE STARTED. WHAT IS CAUSING THAT IS THIS ALL WEATHER ELATED ARE THERE OTHER DYNAMICS T WATCH AS WE HEAD TO 2024

>> YES, AS YOU KNOW, WEATHER NATURAL, GAS THEY GO TOGETHE VERY CLOSELY THIS WARM WEATHER HAS HURT GAS QUITE A BIT. BUT THE BIG OTHER PART OF TH EQUATION IS SUPPLY GROWTH. AND SO MUCH OF GAS SUPPLY IS FROM OIL PRODUCTION. IT WILL PRODUCTION THE U.S. IS GROWING FAST, GAS APPLY WILL

GROW AS WELL IT IS ASSOCIATED WITH OIL. IT’S A BYPRODUCT, RIGHT? WE ARE REACHING LEVELS THAT, I THINK WE HAD ONE OF THE HIGHER ESTIMATES OF WHERE GAS PRODUCTION WOULD BE BY THIS EN OF THE YEAR. IT IS EXCEEDING, I THINK EVERYBODY’S PRODUCTION ESTIMATE THAT IS TRADED ANOTHER SOURC OF OVERSUPPLY.

I THINK NEXT YEAR, IT IS A SITUATION WHERE, USUALLY DEMAN DOES WHAT IT DOES. SUPPLY HAS TO RESPOND. IN THIS MARKET, SUPPLY I DRIVING THE BOAT AND THE DEMAND HAS TO RESPOND. YOU HAVE TO FIND NEW SOURCES O DEMAND TO ABSORB THE SUPPLY.