The global crude oil market is facing pressure from an oversupply, a trend that has become more evident in recent market analyses. According to ICIS chief analyst Tao Wenhai, the global oil market surplus is expected to remain around 500,000 barrels per day in the fourth quarter. As 2024 approaches, this loose supply-demand scenario is likely to continue, and it is anticipated that international oil prices will slightly decline next year, with the average spot price of Brent crude potentially falling from this year's $80 per barrel to $76 per barrel.
Supply Surplus Intensifies, Market Eyes OPEC+ Strategy
The global crude oil market's "historic supply surplus" situation persists. World Bank data indicates that by 2025, global oil production may exceed demand by 1.2 million barrels per day, a severe supply-demand imbalance that has only occurred twice in history—during the 2020 pandemic and the oil price crash of 1998.
If OPEC+ gradually exits the voluntary production cut agreement, the supply surplus in the first quarter of next year is expected to rise to 1.9 million barrels per day. However, with the approach of the driving season, demand peaks may occur in the second and third quarters, temporarily narrowing the supply gap. But as the fourth quarter arrives, declining demand will again drive the market back to a surplus state.
On December 5th, OPEC+ will hold the postponed meeting on production policy, where it is widely expected to extend current production cut measures to stabilize the market. OPEC+ currently has an idle capacity of up to 7 million barrels per day, nearly double that of pre-pandemic levels. This vast capacity reserve will be a critical lever in balancing the market.
Impact of Trump Policies on the U.S. Oil Industry
The energy policy of newly elected U.S. President Trump is also drawing attention. He has nominated oil industry executive Chris Wright as the new Energy Secretary and vowed to boost U.S. shale oil production, even though low market prices might lead some producers to "shut down due to extraction." Despite Trump's inclination towards increased production, the U.S. shale oil industry is undergoing consolidation, with industry giants like ExxonMobil and Chevron more inclined to return profits to shareholders rather than simply expand production.
Data shows that in 2023, U.S. annual crude oil production reached 895 million tons, solidifying its position as the global leader, surpassing Russia and other major oil-producing countries. ICIS predicts that U.S. crude oil production will rise to 13.6 million barrels per day in 2024, but the growth of approximately 400,000 barrels per day is lower than the growth rate during the pre-pandemic shale boom.
Notably, the total number of U.S. oil and gas drilling rigs has decreased for two consecutive weeks, with the latest data showing a drop to 583 rigs, down 7% from the same period last year. This trend indicates that although shale oil production growth continues, its expansion pace has significantly slowed.
Oil Price Outlook Amid Supply-Demand Battles
Currently, global oil demand growth is expected to be 1.18 million barrels per day, while supply growth could reach 1.6 million barrels per day, with non-OPEC countries accounting for an increase of 1.3 million barrels per day. OPEC+ must maintain market share while supporting oil prices to ensure economic development for its member countries, posing higher demands on its production management capabilities.
Market analysts believe that as the pace of global economic recovery slows, the economic performance of the U.S. and China will become crucial variables affecting the crude oil market. Furthermore, OPEC+'s production cut decisions and the adjustment of U.S. energy policies will also determine the direction of the oil market next year.
Under the pressure of supply-demand imbalance, the global oil market faces new uncertainties. Undoubtedly, the energy policies of OPEC+ and the Trump administration will have a profound impact on the market. Against the backdrop of surplus supply and uneven economic recovery, the 2024 crude oil market will be a battlefield of various forces. Investors need to closely monitor policy dynamics and changes in economic data to cope with potential market volatility.
