Headwinds are increasing on oil prices
Oil prices have been stabilizing for two months after hitting a more than one-year low in early September. Oil prices are on the one hand under pressure due to the upcoming increase in OPEC+ production and disappointing economic statistics in China and on the other hand supported by geopolitical tensions.
The oil cartel announced a change in strategy during the summer, now preferring to capture market share rather than supporting prices at all costs. However, OPEC+ postponed its planned production increase by two months to avoid worsening the fall in prices. Despite this delay, the group plans a gradual increase of 180,000 barrels per day each month from October 2024 to September 2025.
In China, economic publications continue to disappoint, particularly those on consumption. Retail sales continue to grow slowly and less than production, worsening the imbalance in the world’s second-largest economy. China has therefore been flirting with deflation for more than a year, and recent support measures should not, or very little, support domestic demand.
On the other hand, oil prices continue to be supported by increasing geopolitical tensions in the Middle East, particularly between Israel and Iran. Nevertheless, it seems that market operators believe that the new American president-elect will succeed in finding peace agreements in Ukraine and the Middle East. If this is the case, then the premium associated with geopolitical uncertainty should significantly decrease, which would cause a further downward impulse on oil prices.
WTI Oil Price Daily Chart – Key Levels
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