More of the Same

This weekly report is an excerpt from our Short-Term Outlook service analysis, which covers a period of eight quarters and provides monthly forecasts for crude oil, natural gas, NGL, refined products, base petrochemicals and biofuels.  Contact John Paisie (+1-832-517-7544 or E-mail) for the detailed analysis or for more information about the Short Term Outlook.


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The price of Brent crude ended the week at $83.63 after closing the previous week at $87.74. The price of WTI ended the week at $76.28 after closing the previous week $80.11.

We continue to hold to our view that we initially put forward in early October that the price of Brent crude will average around $90 during 4Q of this year. Additionally, we expect that the price of Brent crude will remain, for the most part, in the channel between $85.00 and $95.00 because of upside resistance coupled with downside support. We do not see any development on the horizon that changes our view.

  • As part of this forecast is the expectation that OPEC+ will continue to manage supply to align with demand considering the production capabilities of OPEC+ members. The next OPEC+ meeting is scheduled for December 4. At the beginning of last week there was some noise about members of OPEC+ considering a 500,000 b/d increase, but this was quickly knocked down by Saudi Arabia stating that the current cut of 2.0 million b/d  by OPEC+ will remain until the end of 2023. We do not expect any announcement of an increase in supply at the upcoming meeting. Instead, we are expecting that OPEC+ will continue with a strategy to protect a $90.00 oil price.
  • Over the weekend, a geopolitical development which has direct impact on the oil market occurred with the Biden Administration easing some of the oil-related sanctions on Venezuela, which will allow Chevron to initiate limited oil production in Venezuela. We are expecting that the impact on the oil markets – especially in the short-term – will have limited impact and any substantial increase in production will require more time and more capital investments. In our view, the action by the Biden Administration is as much about the concerns about the exodus of some seven-million people from Venezuela as concerns about oil supply.
  • We have been putting forth the view for months that  additional sanctions (including a price cap) on Russian oil exports will be of limited effectiveness; however, the possibility of additional sanctions creates uncertainty and the basis for a risk premium, which otherwise would not be part of oil prices. Recent reports indicate that Europe is considering a cap between $65.00 and $70.00 per barrel, which is not much below current market prices for Russian crude. The proposed price illustrates the dilemma faced by the Europe and its allies in that sanctions that will actually impact Russia’s oil exports are likely to have a major negative impact on the economies of Europe as well as the global economy.
  • In our latest quarterly update of our global outlook for the oil markets, we are forecasting that global oil demand in 4Q will increase by 1.10 million b/d in comparison to 3Q. On average, we are forecasting that global demand will increase by 2.20 million b/d in 2022 and 2.55 million b/d in 2023.

With respect to this week, we are expecting that oil prices will stabilize with oil getting close to being oversold and oil traders significantly reducing their net long positions in the previous week. 

For a complete forecast of refined products and prices, please refer to our Short-term Outlook

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