Texas oil will lose almost 11% in price in 2023

NY. Texas oil has lost nearly 11% in 2023, its first negative year since the Covid-19 pandemic in 2020. subject to the influence of unstable factors, but, above all, to doubts that demand will be able to absorb uncontrolled production.

Texas closed this Friday at $71.65, falling short of the $100 mark some analysts had expected. although it peaked at $95 in late September on fears supply was too low as a result of production cuts in Saudi Arabia and Russia.

Driving factors for the year included production cuts by major OPEC+ producers, which applied upward pressure, as well as record production from non-cartel countries such as Brazil, Guyana and the United States, which flooded the market.

The U.S. produced about 13 million barrels a day last week alone and is responsible for much of the growth in output from the group of non-OPEC countries, shifting supply quotas previously dominated by the Middle East. .

In November, OPEC pledged to cut oil production by 2.2 million barrels per day in the first quarter of 2024, but some analysts do not believe its policies will balance the market.

According to the International Energy Agency (IEA), Oil supply is expected to rise significantly in 2024, especially in the US, as demand halves.

Geopolitical factors also weighed on the price: Texas experienced a brief rally after the Hamas militant wing attacked Israel on October 7, but fell nearly 21% in the last quarter of the year, in parallel with the Israeli offensive on Palestinian territories that is still ongoing.

Investors “have begun to focus on the risk of oversupply in oil markets next year and insufficient demand,” XM analyst Marios Hadjikyriakos said today.

The Federal Reserve’s efforts to control inflation, which appears to be closing in on its 2% target in the US, have also had an impact on the value of the dollar and therefore the crude oil market, so the panorama could change in the coming weeks.

“With markets allowing such a significant rate cut, it could boost the global economy next year and therefore demand,” Oanda analyst Craig Erlam commented in a recent note.