Third successive weekly loss for crude oil futures

As another trading week came to a close on Friday, oil futures posted their third successive weekly loss. That's the first such occurrence since early June and the Brent front-month contract is now down below $80 per barrel, having spent much of the month of July in the red. It seems no matter what the market is presented with inventory-wise, concerns over demand - especially China's demand - continue to weigh on trading sentiment.

The long ongoing divergence in global demand growth forecasts between the IEA and OPEC adds to the element of uncertainty, with the former keeping its projections for 2024 below 1 million barrels per day (bpd) and the latter maintaining them above 2 million bpd. 

And some in the market are factoring in an unwinding of OPEC cuts later this year, even though the Saudi oil minister has been on record saying the producers' group will react otherwise should conditions merit it. It looks like they do! 

Furthermore, for major buyers such as China and India the availability of discounted crude, however nominal that discount maybe, remains as yours truly noted in an interview with Asharq Bloomberg on July 17.

Overall, in a market that's seeking direction and looking at summer demand in the Northern Hemisphere, things have turned south given the absence of clear signals. As things stand, the first month of a pivotal third quarter of oil trading - ahead of a peaking of refinery demand in August - has turned out to be a damp squib for crude market bulls.

But it is (so far) looking like OPEC is not going to do much at its next meeting, Brent remains in backwardation and many are joining the IEA in predicting an oil market surplus toward the end of the year and early next year. Last week, investment bank Morgan Stanley became the latest to do so (For The Oilholic's Forbes post on the subject, click here). Oil is a story of demand too, so supply-side measures can only do so much in terms of impact in prices. 

Generally speaking, most contacts in the market envisage lower crude prices in Q1 2025, and much of the year-end surplus to be in light sweet crude, boosted undoubtedly by relatively higher US production. So the pipe dream of $90 Brent oil prices this year, remains just that - a pipe dream. That's all for the moment folks. More musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

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To email: journalist_gsharma@yahoo.co.uk  

© Gaurav Sharma 2024. Photo: Gaurav Sharma on Asharq Bloomberg TV © Asharq Bloomberg TV, July 17, 2024. 

Oil heading to $90, renewables in Japan & more

It's been a hectic few weeks in the energy markets over the course of which oil prices have acquired a bit of buoyancy. Its something they briefly lost last month following the OPEC+ meeting. Brent crude futures currently sit just a few dollars south of $90 per barrel level, having dropped below $80 in early June. 

While global crude demand permutations haven't materially altered, there is renewed optimism over lower interest rates in key markets. That and higher demand projections in Asian markets, especially India, appear to be supporting prices. This sets the stall for relatively higher crude prices as we enter the first month of the second half of the year. 

All things staying even, the Oilholic would argue there is now a near-term case for $90 Brent crude prices. However, defending price upticks beyond the level would prove tricky, given the fact that crude supplies, especially those of light sweet non-OPEC crude, remain on a solid footing.  

Away from the oil market, yours truly was interviewed by the BBC on Japan's and wider East Asia's renewable energy landscape. The Oilholic spoke about a call by the country's private sector to triple its renewables capacity by 2035. 

This kerfuffle over Japan's future energy mix has been going on since the Fukushima tragedy in 2011, and has been further complicated by readily available and competitively priced LNG. 

Japan continues to trail the G7 in terms of renewables. However, while still using coal as a power generation source, Japan is not expanding usage in the same way as India and China are. Overall, a renewables capacity target in excess of 360GW by 2035 looks very ambitious. However, never discount Japanese ingenuity for getting things done! 

Elsewhere, here is one of the Oilholic's missives from late June on why the world needs to nurture sustainable entrepreneurship for Forbes (click here), and another one on why green hydrogen's fate in a net zero economy hinges on upscaling for Energy Connects (click here).

Finally, on the eve of the UK's general election, here are this blogger's thoughts on how the outcome will impact the country's energy industry. Regardless of whoever wins, looks like UK Energy Inc may be stuck between a rock and hard place! That's all for the moment folks. More musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

To follow The Oilholic on Twitter click here.

To follow The Oilholic on Forbes click here.

To follow The Oilholic on Motley Fool click here.

To email: journalist_gsharma@yahoo.co.uk  

© Gaurav Sharma 2024. Photo: Gaurav Sharma on BBC World © BBC, June 25, 2024.