Oil is one of the most important commodities in the global economy. It is in the eye of the hurricane all the time and even more so when the major world powers are in trouble or are in an excellent moment of growth.
Our analysis will focus on the fundamentals of West Texas Intermediate (WTI) crude oil.
The barrel has had a slightly clearer trend in this fourth week of January 2024, compared to the third week of this same month but has remained between the area of 72.50 and 75.30.
In spite of this price increase, traders have been pending different factors that have interfered in the price, such as macroeconomic data announced and to be announced, information released by OPEC, conflicts between certain countries in different parts of the world, and issues associated with the weather.
To begin with, the world’s second largest economy, China, on January 16, 2024, released its GDP of 5.2%, for the year 2023. This data was lower than expected and analysts were forecasting 5.3% growth. This data has kept the market a bit agitated and especially oil.
Likewise, geopolitical factors in different parts of the world have to be taken into account. The U.S. military confrontations against the Houthi rebels in Yemen, the war between Russia and Ukraine, as well as the dispute between Israel and Palestine, are beginning to have a significant impact on the geopolitical scenario. These events are beginning to influence markets and global economic dynamics.
Traders were also on the lookout for statements to be announced by the Organization of the Petroleum Exporting Countries, OPEC, and the latter announced that it is maintaining its oil demand estimate for 2024 and 2025. The organization announced that it maintains its growth estimates for global oil demand for those years, of 2.2% and 1.8%, respectively.
With respect to weather, extreme cold in one part of the United States is affecting oil production in North Dakota, the third largest producing state. It is also causing production bottlenecks in other states. Despite this, the strength in the stock market suggests strong demand rather than signs of a slowdown in the economy.
Regarding other information, this week, more precisely, on Wednesday, January 24, 2023, the Energy Information Administration (EIA) will announce data on oil inventories, with a forecast of -3000M.
In conclusion, oil is going through a moment of great indecision due to many factors that do not allow investors to identify higher probabilities of what trend the price of black gold could take.