empty
24.11.2021 11:58 PM
The market does not want oil futures at 70. Analysts promise dissenting oil at 100

Oil traders are betting that in the long term, oil prices may rise sharply due to a lack of investment in future supplies.

In other words, most of the producers have missed the lesson of this autumn and are avoiding signing contracts for the supply of oil.

The market does not want oil futures at 70. Analysts promise 100 oil to the dissenters

In fact, they can be understood – at today's prices, it is not profitable to buy and conclude contracts. In the spring, the market will roll back in any case, and then futures will become cheaper.

But the buyers' calculations may not be justified.

And yet, since reaching a one-year high last month, the most active oil futures have already fallen by almost 5%. For comparison, prices at the end of 2022 and 2023 remained virtually unchanged, remaining above $70 per barrel.

Economists noted that nearby contracts are being reshaped by US efforts to increase supply, as well as a potential negative reaction from OPEC +, so more distant contracts are being strengthened by a reduction in production investments and a shortage of producers selling deferred futures to fix their future sales.

For most of the last two months, the market has been approaching the point of super backwardation - the industry is talking about a steep descent of the curve indicating limited supply. But in recent weeks there has been a shift smoothing out this structure, as traders are betting that steady demand and falling investment in new supply will keep the market more tense for a long time.

"I think forward oil prices will be higher than spot prices," said Marwan Younes, a commodity markets specialist. "The world can decarbonize, but it is easier to block oil sources than demand. You will see that prices will rise higher than in a situation of normal hedging of producers."

These opinions echo the comments of officials of some of the world's largest banks and trading houses over the past few weeks.

During this period, US President Joe Biden led global efforts to release strategic oil reserves, which finally happened on Tuesday. The market is now waiting to see what OPEC and its allies will do in response at a meeting early next month, so the contracts are suspended.

As a result, the slowdown in spending growth is reflected in industry indicators.

Thus, the number of drilling rigs for oil and gas production around the world has decreased by about 30% compared to the pre-pandemic data.

At the same time, according to Vitol Group, demand has recently returned to the pre-pandemic level, and a number of other major traders have estimated demand in about the same way.

Trafigura Group, one of the world's largest commodity trading houses, reported that prices for December 2022 and 2023 are still quite low and amount to about $70 per barrel, while in the future prices may reach $100.

Of course, deferred prices matter because they affect the pace of spending on future supply.

Are you alive, OPEC?

Nevertheless, supporting theories of an impending supply shortage (and concern in the market has persisted for several years) is fraught with financial risks.

According to Greg Sharenov, given that demand growth will decrease by the end of the decade, OPEC and its allies may decide to try to extract more oil earlier in order to maximize their resources while demand is still high. That is, to follow the example of this summer by increasing the quota for the UAE.

"If you live in a world with slowing demand growth, especially for refined crude oil, the assumption that OPEC+ members are not reconsidering their approaches to their reserves may let you down over time," Greg said. However, "as investments in long-term assets become more complex, they can potentially be optimistic for the price," as the risks of investing in assets in the long term become more difficult to assess, he added.

Of course, potential optimism is a fairly streamlined concept for making financial decisions. But bullish sentiment is also associated with hedging by oil pumping companies.

Since crude oil prices have risen by 60% this year, producers are steadily reducing their hedging portfolios, believing that they are fully insured by the general upward trend of the market, but at the same time exposing themselves to risk in the event of a market fall.

So, Pioneer Natural Resources Co. has stated that it will not create any hedges for the foreseeable future, while Continental Resources Inc. has also stated that it is largely hedged. And this is an impulse that is not limited only to US shale production. For example, North Sea producer Neptune Energy said it was also limiting its hedge fund.

As a result, traders face less pressure from sellers to buy on the downside of the oil price curve compared to the political price fluctuations that have dominated overall prices since late October.

"We really haven't decided anything with oil prices at $80," Goldman Sachs analyst Damien Kurvalin said in an interview with Bloomberg TV. "Oil is still not at the price that should balance this market over time."

But, perhaps, behind all these conversations there is an attempt to keep prices at a high level and force market players to work in a new price range. However, in the spring it may be too late for many manufacturers to sign contracts.

Egor Danilov,
Especialista em análise na InstaForex
© 2007-2025
Selecionar intervalo de tempo
5
min
15
min
30
min
1
hora
4
horas
1
dia
1
s.
Ganhe com as variações das taxas das criptomoedas com a InstaForex.
Baixe o MetaTrader 4 e abra a sua primeira operação.
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    PARTICIPE DO CONCURSO

Recommended Stories

Os mercados estão instáveis: alguns estão em queda, outros em alta — o que está acontecendo com as ações da Tesla, FedEx e Micron?

Tesla cai com a continuação da queda nas vendas na Europa Ações da FedEx e da General Mills caem após previsões de lucros decepcionantes Micron Technology salta no pregão prolongado

Thomas Frank 17:26 2025-06-26 UTC+2

Resumo das notícias do mercado americano de 26 de junho

Trump impulsiona o S&P 500 para níveis recordes Donald Trump está impulsionando os ganhos no S&P 500, levando o índice a níveis recordes em meio à estabilidade política

Ekaterina Kiseleva 15:42 2025-06-26 UTC+2

Markets Delighted by Fed Inaction: Nasdaq 100 at All-Time High

Indices Rise: Dow 1.19%, S&P 500 1.11%, Nasdaq 1.43% Nasdaq 100 Hits Record Closing High Fed Chair Powell Reiterates 'Wait and See' Approach to Rate Cuts, Tariffs Broadcom Hits Record

Thomas Frank 17:51 2025-06-25 UTC+2

Resumo das notícias do mercado americano de 25 de junho

O entusiasmo pela IA impulsiona os ganhos do mercado As ações dos EUA continuam sua escalada constante, apesar dos riscos geopolíticos persistentes e das tensões comerciais. O Nasdaq 100 atingiu

Ekaterina Kiseleva 17:03 2025-06-25 UTC+2

Sinal de paz entre Irã e Israel agita os mercados: o que está acontecendo com o petróleo, o ouro e as moedas

Os preços do petróleo bruto caem, recuando das máximas de vários meses após a retaliação do Irã As ações de Wall Street fecham em alta, enquanto as ações europeias caem

Thomas Frank 17:29 2025-06-24 UTC+2

Resumo das notícias do mercado americano de 24 de junho

O S&P 500 e outros índices de referência importantes iniciaram a nova semana de negociações com um impulso positivo, apoiados por indicadores técnicos. A alta segue um forte sinal

Ekaterina Kiseleva 17:16 2025-06-24 UTC+2

Ataques do Irã agravam crise do petróleo: S&P 500 congela antes da divulgação de dados importantes dos EUA

Ataques dos EUA ao Irã geram preocupações sobre petróleo e retaliação S&P 500 perto das máximas de fevereiro, mas mostrando sinais de estagnação Aumento dos preços do petróleo gera preocupações

Thomas Frank 16:21 2025-06-23 UTC+2

Resumo das notícias do mercado americano de 23 de junho

As tensões geopolíticas pesam sobre os mercados Os investidores permanecem cautelosos em meio à escalada das tensões no Oriente Médio, enquanto aguardam uma possível retaliação do Irã. Embora as reações

Ekaterina Kiseleva 16:03 2025-06-23 UTC+2

Riscos no abastecimento de petróleo, Ásia avança, dólar se mantém estável

Mercados acionários asiáticos sobem na sexta-feira Petróleo oscila perto da máxima de 4 meses e meio devido aos riscos de choque de oferta Dólar se mantém resiliente devido à demanda

Thomas Frank 15:33 2025-06-20 UTC+2

Decisão do Fed não abala o mercado cripto. Bitcoin mira US$ 205.000 até o final do ano.

Após a reunião de ontem do Federal Reserve, que manteve sua taxa de referência inalterada, os mercados reagiram com pouca intensidade. Os principais índices de ações seguiram dentro de suas

Larisa Kolesnikova 17:03 2025-06-19 UTC+2
Não pode falar agora?
Faça sua pergunta no chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.