Oil Prices to End Year 10% Down, Traders Expect a Better 2024
SINGAPORE, Dec 29 – After a year of geopolitical concerns, production cuts, and measures to combat inflation, oil prices are on track to finish 2023 approximately 10% lower, marking the first annual decline in two years. Despite wild fluctuations, prices stabilized on Friday, the last trading day of the year, as more shipping firms resumed using the Red Sea route, which had been impacted by attacks from Yemen’s Houthi militant group.
Both Brent crude futures and U.S. West Texas Intermediate (WTI) crude futures inched higher on Friday, but they are set to close at their lowest year-end levels since 2020, when the COVID-19 pandemic severely affected global demand.
Throughout the year, production cuts by OPEC+ have failed to prop up prices, resulting in nearly a 20% decline from the peak levels seen earlier in the year.
While oil’s weak year-end performance contrasts with the increase in global equities, market analysts speculate that 2024 may bring better prospects. Investors are betting on upcoming interest rate cuts from the U.S. Federal Reserve, which could reduce consumer borrowing costs and potentially boost oil demand. Additionally, a weakened U.S. dollar makes oil more affordable for foreign buyers, further enhancing the potential for increased demand in the coming year.
According to a Reuters survey of economists and analysts, Brent crude prices are estimated to average $84.43 a barrel in 2024, compared to an average of around $80 a barrel this year. This forecast reflects a decline from the highs of over $100 in 2022, driven by Russia’s invasion of Ukraine.
As the year draws to a close, traders are cautiously optimistic about the outlook for 2024. The anticipated interest rate cuts and a weaker dollar could provide much-needed support to the oil market and potentially drive prices higher.
Despite the challenges faced in 2023, the oil market remains an integral part of the global economy, impacting businesses and consumers worldwide. With expectations for a brighter future in 2024, industry officials hope that stability will return to the market and contribute to a recovery in oil prices.
As we bid farewell to a tumultuous year for the oil industry, traders and investors eagerly anticipate the potential for improved conditions in the coming year. With hopes of increased demand, price stability, and global economic recovery, the oil market could experience a more positive trajectory in 2024. Only time will tell if these expectations will be met, but experts remain cautiously optimistic about the road ahead for oil prices.
Disclaimer: This news article is based on published information and opinions from market experts. It should not be considered as financial or investment advice. As with any investment, readers are urged to conduct their own research and analysis before making any decisions.
