Analysts Predict Sustained Low Crude Oil Prices in Early 2024

Anticipated Continued Dip in Crude Oil Prices for Early 2024, Citing Lower Demand and Increased Production

According to energy experts cited by Money Control, the trajectory for crude oil prices in early 2024 is expected to remain low due to a combination of reduced demand and elevated oil output.

Saumil Gandhi, a senior analyst of commodities at HDFC Securities, highlighted factors such as global demand concerns and the escalation of crude oil production by several countries as key contributors to the anticipated downward pressure on prices.

Gandhi noted that the supply of crude oil currently surpasses demand, leading to a projection that Brent crude prices could fluctuate between $60-65 per barrel (lower band) and $85-90 per barrel (upper band) in the first half of 2024.

The report emphasized that China, a major global economy, has not fully recovered its fuel demand. Additionally, the lower crude prices observed in the preceding two months were attributed to a weakened global economy and a surge in crude inventories in the United States.

In December, the Organization of the Petroleum Exporting Countries and their allies (OPEC+) collectively agreed to implement output cuts of nearly one million barrels per day by early 2024. This decision resulted in a cumulative reduction in production exceeding 2.2 million barrels per day, approximately 2% of the world’s oil supply.

While countries like Saudi Arabia and Russia adhered to these production cuts, several others increased their oil output. Analysts suggested that, unless influenced by geopolitical tensions in the Middle East, the potential for a significant rise in oil prices remains limited.