Investing.com – at a loss for three months and likely to continue to stumble through the end of the year, Macquarie analysts said, as weak supply and demand fundamentals are likely to continue to benefit from any boost from geopolitical pressure in the Middle -East. impulse from China.
“[W]We expect a decline in crude oil prices through year-end 24 as bearish fundamentals outweigh geopolitical factors,” Macquarie analysts said in a recent note.
The supply and demand outlook is at the heart of the weak fundamentals putting pressure on oil prices. Analysts expect a recovery in growth in the fourth quarter, driven by US production growth and the return of OPEC+ barrels at a time when oil demand growth is falling below 1 million barrels per day.
Supply and demand imbalances have curbed the potential rise in oil prices due to rising geopolitical tensions in the Middle East, which pose a risk to global supplies, and stimulus measures from China, the world’s largest oil importer.
“Despite geopolitical tensions and potential Chinese stimulus, fundamentals remain weak,” the analysts said.
The sell-off has returned to the 50-day moving average after a $5 per barrel sell-off over the past two weeks, Macquarie said. “This reflects broader bearish sentiment in the market, with positioning turning more negative as the speculative net length for both WTI and Brent declined last week.”
Looking ahead, Macquarie suggests that unless there is a significant shift in supply dynamics or more robust economic data from the major economies, oil prices are likely to remain under pressure.
“Overall, we do not expect the recent stimulus efforts to have a material impact on oil demand growth until the real estate sector stabilizes and recovers,” Macquarie added.
