Uncertain Future for Crude as Demand Shifts and Production Cuts Take Place

Uncertain Future for Crude as Demand Shifts and Production Cuts Take Place

Oil prices experienced a 2% increase on Monday due to concerns about demand. JPMorgan has predicted that the oil market will face another turbulent year in 2024, with uncertainty surrounding OPEC supply cuts and the growth of other crude producers.

Ines Ferré from Yahoo Finance provides an analysis of the expected oil production levels for the next two years. The full interview can be watched on the Yahoo Finance YouTube page or the entire episode of Yahoo Finance Live is available for viewing.

The recent volatility in oil prices has been influenced by various factors. The production cuts implemented by OPEC+ and the unilateral cuts made by Saudi Arabia and Russia led to a supply squeeze. However, demand from countries like the US has remained resilient. Despite this, oil prices are currently down by approximately 20% compared to last year’s levels.

Looking ahead to 2024, J.P. Morgan analysts anticipate a continuation of the current trends. They predict an average price of $81 per barrel for Brent crude this year, followed by an average of $83 per barrel in 2024. However, they also project a 10% decrease in oil prices in 2025.

Natasha Kaneva, the head of global commodities research at J.P. Morgan, highlighted the key points for oil in 2025. Demand is expected to increase, while non-OPEC+ producers will contribute to a rise in supply. To maintain market balance, J.P. Morgan analysts suggest that OPEC+ will need to limit production.

However, in 2025, there could be an excess of oil due to the widespread adoption of electric vehicles and improved fuel efficiency. The actions of Saudi Arabia and Russia, particularly regarding their unilateral cuts, will play a crucial role in shaping oil prices.

If these cuts are reversed, it could lead to a shift in oil prices in 2025. Additionally, lower oil prices may prompt US producers to scale back on drilling in 2024. On the YFi Interactive platform, WTI prices increased by over 2% and Brent crude prices rose by almost 2% due to the upcoming OPEC+ meeting on November 26.

Reuters reported on Friday that sources suggest OPEC+ may continue with further production cuts in 2024. This information caused a slight uptick in oil prices.