20.11.2023 – Oil is rising again slightly, the price of American natural gas continues to fall. The determining factor at the moment is not the conflict in Gaza. It is simply supply and demand.
This is the mixed situation for crude oil: both OPEC and the International Energy Agency (IEA) have just raised the outlook for demand, pointing to China and robust economies in the West. On the other hand, traders pointed to rising oil inventories in the US, record-high production in America and the first decline in US retail demand.
Source: Bernstein Bank GmbH
Last Friday at least there was a counter-reaction in Brent, the four-hour chart above: the price rose by over 4 per cent in the meantime. But this was above all simply short covering – the bears are fed up for the time being. John Kilduff, an expert at asset manager Again Capital, told the Reuters news agency that there had been natural profit-taking.
What the bears are saying
Fundamentally, the market is swimming in oil. Andrew Lipow, head of the Texan management consultancy Lipow Oil Associates, told the news agency Bloomberg that the low prices are a sign “that the market is oversupplied at the moment”. The expert referred in particular to the expiring sanctions against Venezuela. Furthermore, OPEC+ will probably allow its production cuts to expire in the first quarter. Andrew Pile, an analyst at investment consultancy CIBC Wood Gundy, expressed a similar view: also in an interview with Bloomberg, he spoke of an oversupply and an expected slowdown in the US economy.
What the bulls say
However, Christyan Malek, Head of Energy Strategy at JPMorgan, warned that the market is underestimating the possibility of further OPEC+ production cuts. There could already be drastic changes at the next meeting on 26 November. In fact, the Financial Times also reported such an option. Anger at Israel is growing in the cartel: “an additional Opec+ cut of up to 1mn b/d could be on the table, one informed person said, describing the cartel as “galvanised” by the conflict.” So this looks very much like a punishment of the West.
It should be noted, however, that the Arab world and its radical left-wing supporters in the West should at some point accept that Jews have not allowed themselves to be slaughtered without defence for 75 years. As in these massacres: Granada 1066, Fez 1565, Benghazi 1758, Algiers 1815, Damascus 1840, Baghdad 1941, to name but a few. Submissive politicians in this country who kowtow to the raging mob should also abandon the naive idea that Israel or the West can do anything to make the hatred in the Arab world disappear.
Gas tanks full to bursting
Let’s turn briefly to natural gas. Here, too, we are currently seeing an oversupply, as shown in the daily chart of US gas.
Source: Bernstein Bank GmbH
Investing.com recently reported that tanks in the USA were already 6 per cent above normal levels as at 10 November. The London Stock Exchange Group added that the output of natural gas from the 48 producing states in the USA reached a new record of 107.2 billion cubic feet per day in November, following a new high of 104.2 billion in October.
The conclusion from all of this is that the energy market currently appears to be saturated. The remaining disruptive factor is politics. The question of all questions is this: Will Iran intervene in the Middle East conflict after all or not? So keep an eye on the real-time news – we wish you successful trades and investments!
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