news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

for crude oil trading bulls, last week was a painful week: both u.s. oil and brent oil hit new lows since june 2023 last friday. among them, the october contract of wti crude oil futures fell 2.14% last friday, and fell 7.99% last week, setting a new closing low since june 2023; the november contract of brent crude oil futures fell 2.21% last friday, and fell 9.82% last week, also setting a new low since june 2023.

the reasons that drag down oil prices come from both supply and demand aspects: on the one hand, the crude oil supply from the united states and opec+ seems to continue to increase; on the other hand, it seems difficult to increase oil demand in either china or the united states.

looking ahead to the future of oil prices, the clouds seem to be thicker. both vitol group, the world's largest independent oil trader, and morgan stanley, a wall street institution, have issued pessimistic warnings.

wti oil price trend over the past year

china's oil demand is about to peak

recently, vitol group, the world's largest independent oil trader, said that china's gasoline consumption will peak as the country undergoes an energy transition, which has further exacerbated concerns about an oversupply of oil.

as the world's largest oil importer, china's oil demand is an important factor affecting global oil supply and demand, and is therefore closely watched by market participants.

“china's gasoline demand may peak this year or next— not because no one is driving, but because mainstream models are slowly shifting to electric vehicles,” russell hardy, ceo of vitol group, said in an interview.

meanwhile, u.s. crude oil production is near record highs, and the opec+ alliance is preparing to increase production - although opec+ recently postponed its production increase plan by two months due to concerns about market supply and demand.vitol group believes that the market will be adequately supplied for at least the next two years.

"people are coming to the conclusion that unless there's a supply shock, the next 12 months is not going to be an easy environment for them," hardy said, adding that at the moment, the market is not too worried about supply in 2025 and 2026.

vitol group expects global oil demand to peak in the 2030s, while global oil demand growth will remain quite strong in the next few years. however, he also expects china's gasoline and diesel demand to begin to show signs of weakness as china's oil-burning vehicles are replaced by electric vehicles and lng-fueled trucks.

hardy predicts thatglobal oil demand growth will fall to about 1.1 million barrels per day next year from 1.65 million barrels per day this year., most of which will come from developing countries.

in the past two years, due to the impact of the covid-19 pandemic and the conflict between russia and ukraine, the global oil market was in great chaos. now, hadi pointed out that this chaotic period is gradually coming to an end.

“this year the market is more organised, more stable, trade flows and patterns are more predictable... volatility has reverted to levels closer to the mean,” he said.

several investment banks lowered their oil price forecasts

meanwhile, morgan stanley cut its brent crude price forecast for the second time in recent weeks as demand challenges intensified while supplies remained ample.

morgan stanley expects global benchmark oil prices to average $75 a barrel in the fourth quarter, according to a report by analyst martijn rats and others, compared with an expectation of $85 earlier this year and a lower estimate of $80 just last month.

in addition to concerns about weakening demand in china, analysts are also concerned about recent signs that the u.s. economy may be slowing down. the non-farm payrolls reports released by the united states in the past two months have fallen short of expectations and have been revised down from previous figures, causing the market to worry that the risk of a u.s. recession may be greater than expected.

morgan stanley analysts wrote in a report:the recent oil price action is similar to other periods when demand has been quite weak.”

in fact, morgan stanley is not the only one on wall street worried about the outlook for oil prices - goldman sachs also lowered its oil price forecast last month. citigroup also recently said that the market looks oversupplied and that unless opec+ further cuts production, oil prices may average $60 a barrel by 2025.