Oil commentary - 26 September 2024

Morning all. Fursdayyyy. Brent is trading this morning at $71.17, down 2.28, and WTi is trading down 2.17 at $67.52. At the risk of showing my age here, I fear I know no better comparison. In the mid-1990s, there was a comedy show on the BBC called The Fast Show. It was very funny, with lots of different sketches and characters, some of which will go down in comedy history. One of them was a farmer called Jesse, who had tips on fashion or the latest diet, etc. He would start each sketch with, “This week I shall mostly be…”. Well, the oil market is Jesse. “Today, I shall mostly be worried about Chinese oil demand.”

Honestly, I’m not sure I’ve known a market that one day says, “Today! I shall be interested in Libyan supply disruptions.” Then up we go. The next day, “Today! I shall mostly be interested in non-farm payrolls.” I wonder, though, does Jesse’s argument about worrying about what demand looks like simply trump all the other concerns the market faces? What do I mean by other concerns? Should they even matter? Shall I ask another question?

Hmm, we can talk about all of the above, and I think this is what the market is doing, but when we boil everything down, the market faces the stark reality of demand levelling off and supply growing. This morning, for example, is quite an unusual start to the trading day—we are down 2.28 on Brent since 08:15 UAE time. This is on fairly low volume too. Some are attributing the drop this morning to the following: SAUDI ARABIA READY TO ABANDON $100 CRUDE TARGET TO TAKE BACK MARKET SHARE - FT (RPT).

Does this headline not ultimately land us at the same outcome, though? Measures are being taken to ensure market share is retained in a world where demand for that very oil is a cause for concern. Are we back into the old argument we used to have pre-COVID about the battle for market share, both within the OPEC+ group and the thorn in the group’s side that is US oil production?

Blimey, lots of questions today, Stanley. Yep, you’re right. But with so much going on that the oil market has to contend with, I just wonder if most of it is being dismissed and the fundamentals are front and centre.

Good day.