“The weakness in Chinese demand and the higher supply by Non-OPEC+ producers have pushed oil prices lower. The geopolitical premium has also diminished as fears for escalation in the Middle-East have eased. OPEC+ postponed its plan to revive production until December, but it was not enough to reverse the trend. We revisit our outlook for Brent downward to average 73 $/b in Q4 as the market surplus widens. Over time, the expectation of a recovery in demand on the back of central bank rate cuts should firm oil prices. Oil prices have been witnessing a downward trend since August, with an average for Brent of 78.8 $/b in August. Multiple factors lead to a decrease in prices, which reached a 14-month low of 70.6 $/b in September. First, the disappointing activity data for the Chinese economy and demand outlook as well as fears of a hard landing for the US economy. Second, the increase in the supply by non-OPEC countries, especially the US, Guyana, and Brazil. Finally, the perceived easing of geopolitical tensions as fears for escalation in the Middle-East eased. Brent prices were trading around 71.7 $/b at the time of writing.”
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Morten W- Langer
