As Russia’s war against Ukraine intensified and Iran committed to cease producing uranium enriched near the level needed for nuclear weapons, oil fluctuated between gains and losses.
After Ukrainian forces used Western-supplied missiles to launch their first attack on a Russian border territory, West Texas Intermediate fluctuated around $69 per barrel. President Vladimir Putin’s approval of a revised nuclear doctrine that broadened the parameters for the use of atomic bombs increased tensions. Iran has promised to cease generating uranium that is close to bomb-grade, according to the International Atomic Energy Agency, which might reduce Middle East tensions.
Even though geopolitical events have occasionally caused petroleum to rise this year, worries about Chinese demand and an abundant global supply have kept oil prices marginally down for 2024. For the first time in nine months, the WTI prompt spread, which is the difference between the two closest futures contracts, moved in a negative contango pattern on Monday, suggesting that short-term supply may be outpacing demand.
According to sources, on Monday that quoted a senior Lebanese official, Lebanon and the Hezbollah group have accepted a US plan for a cease-fire with Israel, further reducing costs. A U.S. official warned that talks were still in progress. On the supply side, Equinor ASA resumed production at the North Sea’s Johan Sverdrup oil field to two-thirds of its capacity after stopping it the day before.
As Chinese demand continues to wane, the International Energy Agency has predicted a possible surplus of over a million barrels per day next year. This may be much greater if OPEC decides to boost supply. According to a note from analysts led by Kim Fustier, HSBC anticipates the cartel will postpone a possible production increase until April 2025 during its meeting on December 1.
