Review of Oil Trading Markets - 2024 - 2nd to 6th December

A week of significant news stories, first out of the hat was the collapse of the French Government, something that hasn’t happened since 1962.

A tough position for President Macron as his prime minister Barnier, the former Brexit negotiator, was forced out of office by left and right wing parties over the efficacy of his government’s new budget proposals.

However, there was some respite for President Macron as he was joined by U.S. President elect Donald Trump, President Zelensky, Prince William and other dignitaries at the re-opening of the newly restored Notre Dame cathedral in Paris.

Whilst this was a social occasion it is quite clear that those enveloped in the Ukraine/Russian war sat down with The Donald to discuss how the end of the war will happen and where America stands in terms of future financial support for Ukraine.

They surely discussed much over dinner.

Meanwhile In Syria, insurgents trying to unseat President Bashar Al-Assad reached the suburbs of Damascus, opposition activists and a rebel commander said on Saturday.

A rapidly moving offensive has?taken over some of Syria’s largest cities. Reports say?fighters were also marching from eastern?Syria?towards the Damascus suburb of Harasta.?

Whilst President Assad (supported by Russia and Iran since 2025) was reported to be in Damascus on Saturday (having returned from visiting friends in Moscow to ask for help to quell the uprising but they seem preoccupied with other issues).

However, by Sunday, Reuters reported he?had left the capital Damascus on a plane, as rebels entered the city and residents reported heavy gunfire.

Assad's destination is unknown, the report said, citing two unidentified senior army officers.

The government had said on Saturday that Assad was continuing to run the country from the capital as speculation swirled regarding his whereabouts.

The rebel group Hayat Tahrir Al-Sham said on Telegram that they have entered Damascus, Agence France-Presse reported. The Syrian military and security forces have left Damascus airport, AFP said, citing the Syrian Observatory for Human Rights, which tracks the conflict.

Assad had lost authority over large swaths of the northwest of the country in the past week as opposition fighters made a shock advance out of Idlib province. They first captured Aleppo, one of the biggest cities in Syria, and then advanced on Hama.

Early on Sunday, AFP cited the rebel group as saying that they had captured Homs, a city just a two hour drive awav from Assad's palace in Damascus.

Donald Trump declared “this is not our fight, Russia should be pleased this is happening”

As chaos and conflict in the World shifts up a gear with the Syrian news, oil markets too found a reason to be back in the headlines as Opec’s postponed December 1st meeting became a more significant one but this time littered with new ideas on December 5th.?

Well, new ideas sounds more impressive than the eventual outcome which was more of the same but this time to be played over a longer period of time.

As many in the oil markets predicted, OPEC+ produced yet another gasping fish out of water type of solution to their perennial problem… ie everyone else outside opec continues producing too much oil versus the level of global demand. This time around their attempt seemed more Machiavellian than the previous three as they wrapped a continuation of their supply cuts into a kind of time machine.

However, the base plan remained the same, to keep oil prices as high as possible by stabilising the market but the twist this time is to extend the output delay by another three months, additionally?lengthening the timing of the gradual return of the 2.2 mbd over 18 months instead of the originally planned 12 months, thereby reducing the monthly supply increase and minimising the supply shock to the market…. Are you bored yet?? Simultaneously, the group urged the overproducing countries, namely Russia (aren’t they joint head of OPEC+?), Iraq and Kazakhstan, to re-submit their compensation plan by extending the timetable until the end of June 2026. As part of this bright, fresh new plan the UAE, which had secured a 300 kbd increase in its production baseline for 1 q 2025, will see the start of their rise pushed back by three months to April, which they can’t be too happy about. Moreover, the producer group extended the two additional layers of production cuts, totaling 3.65 mbd, to the end of 2026! Consumers both industrial and domestic must be fuming at the ever more complex creations opec produce to keep oil prices as high as possible regardless of the impact upon others. By the time the oil market had figured what all of this means it was the weekend.

Either nobody read it, or it was too tedious for words, but the knee jerk upward reaction in prices to this masterpiece was a yawn and the markets drifted lower.

Maybe we are all too used to Opec’s deliberations now as they continue to fashion new ways to reinvent the wheel.

Their timing was also off, December isn’t an ideal month to make sweeping statements on oil especially right in front of the year end holidays, all their efforts saw markets ease lower as Friday evening darkened.

In other news…..

Barclays and Morgan Stanley gave their forecasts for oil prices for 2025 and to some degree 2026.?

In a nutshell both reports suggest that whilst the oil market is suffering from weak sentiment going into 2025, the OPEC+ plan may eventually result in tighter markets and higher prices.

Barclays in particular suggests the outlook for oil has become too negative although both agree that “the prospect of an oversupplied oil market in 2025 is not a backdrop that is likely to encourage new investors into energy equities”.

Morgan Stanley suggest the?delay in increasing supply to the market and the slower ramp-up in OPEC+’s oil production could mean a smaller surplus in oil supply than expected, Morgan Stanley analysts wrote in a note, as carried by Reuters…….”Excluding the three OPEC members exempted from the cuts (Iran, Libya, and Venezuela), the other nine OPEC producers are now expected to pump 400,000 bpd less in 2025”, the bank said.

Whilst Barclays consider crude oil prices could slip to the $55 to $60 a barrel range in 2025,Morgan feel something in the $66 to $68 range to be more likely but by the second half of 2025.

We could go on and on but the bottom line here is whatever the new opec plan really means and whatever banks think of oil prices during 2025 and beyond unless oil supplies are delayed or partially cut off from leaving the Middle East we can be quite confident this dreary oil market will continue.

And to complete the madness of the week, “Dorothy’s” ruby slippers from “The Wizard of Oz” sold at a U.S. auction for $28 million!!

Maybe we could all do with a pair to solve the woes of the World. Meanwhile…..

This week’s closing guide prices:

ICE Brent 71.12 (-1.29)

WTI 67.20 (-1.22)

Ice gas oil 647.75 (-23.50)

Euro Mogas swaps 651.25 (-6.75)

Euro naphtha swaps 596.00 (-7.75)

Nymex gasoline 1.9062 (-.031)

Opec basket 72.19

Credit - Bob Haynes - Silvergreen Energy Ltd.