Nhim Kosol, Deputy General Manager at PPLS.
Oil continued in its downward tumble, with the bearish trend seeing the price of crude slide from a peak of $95.30 dollar per barrel in September to settle below $69 a barrel in Tuesday trading.
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Market sentiment showed concerns over the effectiveness of a significant production cut by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+), oversupply in the US crude inventory and resilient inflation.
An additional production cut of one million barrels a day was announced at the November 30 OPEC+ meeting, while “Saudi Arabia agreed to extend its cut of one million barrels a day that it announced in June”, the Wall Street Journal reported.
After the OPEC+ announcement, the price of crude rose two dollars, moving from $77.50 to $79.50 a barrel in the Asian trading session, before pulling back to $75.60.
Concerns over global oil demand have risen, with the International Energy Agency (IEA) on November 14 projecting slower growth for the rest of this year and 2024, with its estimate of 930,000 barrels per day well below OPEC’s 2.25 million forecast.
Meanwhile, US oil stockpiles surged to 29.6 million barrels, up from 27.7 million, WSJ reported on December 6, with the Strategic Petroleum Reserve (SPR) seeing a 330,000 barrel increase to 351.9 million barrels.
Crude prices further declined following this data release, settling below $70 a barrel, with this continued drop reflecting market concerns over weakening demand leading to oversupply, as well as doubts regarding the commitment of OPEC+ to additional production cuts.
US consumer prices remained resilient in November, holding steady at 3.1 per cent, while core CPI, excluding volatile food and energy prices, rose to 0.3 per cent from 0.2 per cent.
This unexpected strength fuelled market concerns over the US Federal Reserve potentially delaying its rate cut timeline until early next year.
Continued high interest rates could lead to slower economic growth, potentially dampening oil demand and exerting further downward pressure on oil prices.
With the Federal Open Market Committee (FOMC) meeting and the Fed’s interest rate decision set for the early hours of Thursday (December 14) Cambodian time, crude trading between $65 and $69 a barrel could be expected this week.
