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The spot value for North Sea Brent oil, an necessary reference value for world oil commerce, fell by two % on Wednesday night to beneath $80 per barrel. The oil value has fallen by nearly 15 % since mid-October and is now on the lowest stage since July.
The worth of US mild oil (WTI) for supply subsequent month falls greater than two % to beneath $76 per barrel, additionally the bottom stage for the reason that summer season.
– By no means seen
In response to Sparebank 1 Markets analyst Teodor Sveen-Nilsen, fears of weaker demand are once more taking part in a job, partly brought on by poor macro figures from China. Final week there have been additionally figures exhibiting that US crude oil inventories rose sharply. The market fears continued excessive rates of interest and the best-predicted recession of all time.
– It is usually clear that extra emphasis is positioned on damaging information than constructive. Saudi Arabia and Russia have now confirmed that they are going to proceed the voluntary discount of 1.3 million barrels per day. Even when it is one thing they’ve alluded to earlier than, I feel such affirmation would often get a constructive response.
Whereas the second half of 2023 was marked by a good bodily market, Sveen-Nilsen believes buyers now have their sights set on the primary half of 2024, which does not look practically as tight – so long as there aren’t any additional cuts from Opec+ come. .
The estimates of the massive organizations additionally differ broadly. Whereas OPEC expects demand development of two.4 million barrels subsequent yr, the companies IEA and EIA count on 0.9 and 1.3 million barrels per day respectively.
– I’ve by no means seen such cracks. It’s a surprisingly giant unfold, I’d nearly say sensational. I feel the reality lies someplace between the IEA and EIA estimates, as a result of for my part OPEC is totally destroyed.
He notes that Opec is an curiosity group for oil producers and that the IEA was traditionally created for oil shoppers, however he wouldn’t say out loud whether or not that influenced the evaluation.
– If Opec’s estimates are to achieve success, there have to be no recession, mixed with terribly robust development in giant components of the world. There have to be above-trend development, and that requires additional restoration after Covid. We’ve got caught up all over the place, except for China, which is now struggling to catch up.
Oil analyst Teodor Sveen-Nilsen. (Photograph: Elin Høyland)Sparebank 1 Markets is in with a mean estimate of $75 per barrel for subsequent yr.
– The one factor we all know concerning the oil value is that it’s going to fluctuate lots sooner or later. It can drop to a stage the place producers have to shut their doorways as a result of money move is damaging, and will result in triple-digit panic costs once more.
Sveen-Nilsen follows a lot of oil firms. Currently he has made extra downgrades than upgrades, and general there’s much less upside available from the value targets he has set for every particular person inventory. However there are nonetheless a number of shares he actually likes:
The article continues beneath the commercial– A month and a half in the past I chosen Aker BP, Panoro and IPC, and I can nonetheless reside with these suggestions. If I had to purchase a inventory and reside with it for the following ten years, I’d select IPC, he says.
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The European fuel value, measured in opposition to the reference index TTF, has remained comparatively steady just lately. Transformed to grease equivalents, this quantities to roughly $80 per barrel.
– Within the quick time period, it’s nearly completely the temperature that may decide the value. Shares are full now, however I feel they are going to be step by step depleted in a couple of days, as that is the week when the heating season often begins.
The acute fuel costs that had been reached in 2022 are actually a factor of the previous, however costs are nonetheless considerably larger than earlier than the pandemic. Russia was beforehand chargeable for 40 % of the fuel coming into Europe, however is now solely chargeable for 5 %, Sveen-Nilsen stated.
The article continues beneath the commercialPresent all positions
– In the long run, the European fuel state of affairs is just not sure. Russian fuel have to be changed by piped fuel from elsewhere or liquefied pure fuel (LNG), however Europe doesn’t have enough import capability and the US doesn’t have enough export capability to soak up the lack of Russian fuel for a number of years, says Sveen-Nilsen.
One of many major explanation why fuel costs have fallen sharply is a extreme drop in demand, so-called “demand destruction”. The energy-intensive European business, particularly in Germany, has sharply decreased manufacturing.
– Manufacturing is down 10-20 % in comparison with 2019 ranges, and there are direct results from excessive power costs. In my view, the fuel market will solely normalize once more between 2025 and 2027, says Sveen-Nilsen.(Situations)Copyright Dagens Næringsliv AS and/or our suppliers. We want you to share our instances through hyperlinks that lead on to our pages. Copying or different use of all or a part of the contents might solely be made with written permission or as permitted by regulation. For additional situations see right here.
Oil analyst on wild development estimates: – I’ve by no means seen something prefer it
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