Oil commentary - 3 January 2024

Morning all and not just a welcome to Wednesday. No, not just a welcome to January either! No no no, but a massive welcome to 2024. Happy New Year to all of you and here’s to a good year for everyone. Brent is trading this morning at $75.73 down 0.16 and WTI is trading down 0.17 at $70.21. “And Mum and Dad can hardly wait for school to start again”. Said Meredith Wilson, and isn’t that just spot on. Bless them. Moving on, quickly – BLIMEY TALK ABOUT NEW YEAR HANGOVERS! What were Barclays consuming? I’m guessing not Appletini’s. Or anything with Apple near it considering they said yesterday “Apple shares closed 3.58% lower on Tuesday…after Barclays downgraded the iPhone maker on concerns that demand for its products would remain weak in 2024”. Well thanks very much! Said Tim Cook, probably. Turns out the apple doesn’t fall from the tree either (ahthangyew) with oil having a brutal day, too – at one stage Brent was doing rather nicely at $79.06 before Barclays went yeah yeah yeah, but nah nah nah, and Brent closed down at $75.89. B R U T A L. So, what does this mean? Oil is being affected by other markets around it? Well arguably, this is always the case, but without getting any crystal ball out, I do think the market will be focused on economic (and thus oil demand) concerns during the early part of the year, even though tensions in the Red Sea are seemingly ever increasing. Of course, once oil prices do suffer a period of particular weakness that an OPEC member doesn’t like, then we will hear murmurings of meetings and discussions, this is hardly surprising and yesterday we heard that OPEC+ plans to hold a JMMC meeting at some stage early February. What the oil market needs to figure out though is what all these tensions in the Middle East are worth – where would oil prices be if Red Sea transit was not an issue? Would we back in the high 60’s? What if demand data starts to come in for Q4 that shows that oil demand is on an upward trajectory? Would supply concerns push us back up to the $80-$85 range again? Hmm, many questions, so keep your eyes on the headlines for clues to the answers. Good day, week and year to all.