Americas News
Oil Losses In 2023 Exceed 10%, Analysts Predict More Gloom Ahead
A year's worth of roller coaster trading based largely on demand worries and geopolitical fears resulted on Friday of reports that crude futures lost over 10 percent for 2023 – along with another daily loss, albeit minuscule.
The yearly loss was the lowest since 2020, and despite repeated output cuts from the Organization of Petroleum Exporting Countries (OPEC), rising production outside of the cartel along with concerns about slowing demand, were said to have contributed to lower crude prices.
Brent on Friday settled down 11 cents at $77.04 per barrel, while West Texas Intermediate settled down 12 cents at $71.65 per barrel.
Unsurprisingly, analysts surveyed in a poll were equally gloomy about prospects in the New Year: Reuters reported that 34 pundits believed Brent will average $82.56 in 2024, down from a forecast of $84.43 last month, with weak growth limiting demand.
Andrew Lipow, president of Lipow Oil Associates, added that the war between Israel and Hamas will continue to impact crude trading: he said, "We are going to see continued volatility as we go into 2024 with the geopolitical events and the fear that the conflict could spread throughout the region."
Amrita Sen, co-founder and director of research at Energy Aspects, was slightly more optimistic: while she conceded to Bloomberg that 2023 had been a "very choppy" trading year, she went on to remark that, "We need sustained stock draws; we had big stock draws in the DOE numbers yesterday, if we see a continuation of that I do think confidence is going to come back."
Sen was referring to news in the previous session that the U.S. experienced a much larger-than-expected inventory draw last week –the bulk of which, however, came from the Gulf Coast region, where refiners were clearing inventories to avoid high storage taxes at year end.
As for Middle East hospitalities and related attacks on vessels in the Red Sea, Michael Kern, analyst at Oilprice.com, noted that, "Brent futures have marginally declined to $78 per barrel after Maersk and CMA CGM announced their resumption of transit through the Suez Canal, widely seen as a sign of impending normalization."
But he added with regard to U.S. inventories, "At the same time, the few market participants still trading before New Year's Eve shrugged off the seemingly bullish 7 million barrel draw."
