Since December 2023 crude oil prices have been in a range of $76-$86/bbl and this has resulted in stable energy prices that have led to a stable decline in inflation. However, as the OPEC+ meeting takes place on 1st August, the current prices have reached a critical $77/bbl. Will the prices break the lows or will there be a reversal?
From the demand side, the fleet in transit continues to show sustained demand as the economic growth is stable. It will be crucial to see post-August as the pre-festival peak demand takes shape. Supply-side OPEC+ will be starting to reduce its voluntary cuts in October.
From the market perspective, CFTC data shows that asset managers are still net short on crude oil. The current amount stands at 30,000 contracts which is worse than February 2024 but better than December 2023.
Given the critical period we are entering as the US elections heat up and the tensions in the Middle East are escalating the OVX ( oil volatility index ) remains much calmer near its lows. But since the start of the month, it has risen 16%.
It is important to see how this quarter-end price pattern gets formed as it would form a trend for the next two quarters as they are peak oil demand periods.
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