November 2024 became another month marked by significant volatility but no sustained trend in crude oil prices, with both ICE Brent and NYMEX WTI front-month futures experiencing only modest declines of $0.49, or -0.7%, month-to-date as of November 26.
EXECUTIVE SUMMARY
November 2024 became another month marked by significant volatility but no sustained trend in crude oil prices, with both ICE Brent and NYMEX WTI front-month futures experiencing only modest declines of $0.49, or -0.7%, month-to-date as of November 26. However, on average, Brent traded at $73.41 per barrel during the month, down by 2.5% from October’s $75.31, while WTI averaged $69.66 per barrel, a 2.6% decrease compared to October’s $71.52. The month began with a rally continued till November 7, during which Brent climbed from $73.10 to $75.63, gaining 3.5%, and WTI advanced 4.1%, rising from $69.49 to $72.36. This early-month strength was driven by market optimism around OPEC+ maintaining output cuts and heightened geopolitical concerns, including U.S. sanctions on Iran and uncertainty in the Middle East. However, moving onwards, the prices reversed sharply with Brent fell to $71.04 by November 15, losing 3.8%, and WTI dropped to $67.02, down 4.8%. This decline was largely attributed to weakening global oil demand. In particular, China’s ongoing slowdown, marked by six consecutive months of declining oil imports, weighed heavily on market sentiment, compounded by lackluster economic activity in the Eurozone and signs of deceleration in U.S. manufacturing. The bearish outlook also prompted speculative traders to reduce net long positions, intensifying selling pressure in both benchmarks. The prices regained some ground during following days, with Brent recovering to $75.17 on November 22 and WTI rising to $71.24, supported by a resurgence of geopolitical tensions. Escalating rhetoric between the U.S. and Russia, coupled with uncertainties surrounding Iran’s nuclear program and Middle East conflicts, temporarily lifted prices as traders factored in the risk of supply disruptions. However, this recovery proved short-lived as reports of a potential ceasefire between Israel and Hezbollah emerged toward the end of the month. By November 26, Brent had slipped to $72.32, while WTI eased to $68.77. The prospect of reduced geopolitical risks, combined with a stronger U.S. dollar fueled by President-elect Donald Trump’s trade policy announcements, pressured crude prices.
As the market looks ahead to December, the OPEC+ meeting on December 1 will be pivotal. We anticipate that OPEC+ will likely postpone the reduction of its supply cuts during its upcoming meeting on December 1. Given the current oil price levels and ongoing supply/demand dynamics, there is a strong incentive for OPEC+ to maintain its production cuts until at least the beginning of Q2 2025. This delay will also allow OPEC+ to assess the policies of a newly reelected President Trump, whose stance on oil prices presents both opportunities and risks. On the positive side, Trump has signaled his intent to impose sanctions on Iran and Venezuela’s oil sectors while reducing support for alternative energy sources. On the other hand, his push for increased domestic oil production could have negative implications for global oil prices. The major risk to oil prices in December will also lie in the pace of global oil demand growth. While the U.S. economy shows resilience, both the Eurozone and China still are facing significant challenges. Meanwhile, the U.S.-China Economic and Security Review Commission has recommended that the U.S. strip China of its "most favored nation" trade status. If enacted, this would subject $427 billion worth of Chinese exports to the U.S. (based on 2023 figures) to tariffs ranging from 35% to 100%, with President Trump signaling plans to impose a 60% tariff on Chinese goods. Furthermore, despite economic strength in the U.S., the manufacturing sector remains in contraction across all major economies, further dampening the outlook for global demand. Despite from the technical point of view the picture in major crude benchmarks still looks rather grim, prolonged albeit volatile consolidation of the crude oil market above the threshold of $70 per barrel of Brent crude during three months of Fall 2024 gives more grounds to our cautiously optimistic view on further oil prices perspectives. Highly probable extension of OPEC+ production cuts for another several months in 2025 should become a stabilizing factor, providing a floor to prices, preventing sharper declines despite bearish demand signals, while geopolitical tensions in Eastern Europe and the Middle East still remains intact, despite the recent Israel-Hezbollah cease-fire agreement. Global oil demand expectations also are rather weak at the moment, comparing to a half-year ago, so positive surprises in this area are becoming more and more probable, taking into account several months of worsened projections. That’s why we still recommend to play long and buy dips on the crude oil market, even if crude futures slump below a $70 Brent threshold to subsequent resistance levels of around $65 per barrel for Brent and $62-63 pe barrel for WTI.
The International Energy Agency (IEA) reported that global oil supply is rising at a healthy clip now. In October 2024, it increased by 290 thousand barrels per day (kbd) in comparison with the previous month to 102.9 million barrels per day (mbd), as the return of Libyan barrels to the market more than offset lower Kazakh and Iranian supplies. Following the early November US elections, the agency confirmed its expectations that the United States will lead non-OPEC+ supply growth of 1.5 mbd in both 2024 and 2025, along with higher output from Canada, Guyana and Argentina. Plagued by a number of unscheduled outages and operational underperformance this year, Brazil is expected to be a major source of growth next year. Latin America’s largest producer is forecast to boost its oil supply by 210 kbd to 3.7 mbd in 2025, as more than 800 kbd of new capacity starts up. In result, total growth from the five American producers will more than cover expected demand growth in 2024 and 2025.
According to the U.S. Energy Information Administration (EIA), total oil production around the globe experienced even a more notable surge within the month, marking a significant shift in its recent trajectory. More exactly, the total output rose by 0.99 mbd compared to the prior month, equivalent to a 1.0% MoM increase. This uptick interrupted a two-month streak of declines, culminating in the highest production level observed over the past quarter. Moreover, the pace of this recovery was the fastest monthly growth seen in 8 months. On a year-over-year basis, global oil production increased in October by 0.42 mbd, reflecting a modest 0.4% YoY rise. When compared to the five-year average for October, this year’s production outperformed the mean by a substantial margin of 3.92 mbd, representing a 4.0% gain and underscoring the growing demand for oil on a global scale.
Total OPEC crude oil production in October 2024 demonstrated a notable upswing, increasing by 491 kbd compared to September 2024, marking a 1.9% MoM rise. This surge, while rather modest in absolute terms, represented the most pronounced month-on-month growth rate in over two years, specifically a span of 26 months. This break from a two-month streak of declining monthly production was fully attributed to return of Libyan barrels to the market after most oilfields in the country were shut during late August and a better part of September amid internal political tensions. The year-over-year comparison presented a contrasting narrative as the OPEC October supply was down by 1.36 mbd from the same period in 2023, equating to a substantial 4.9% YoY decline. This annual reduction continued a prolonged downward trajectory, now extending into its 19th consecutive month, reflecting deep production cuts within the cartel over recent two years. Not surprising, the October output also lagged substantially behind the five-year average for the same month. The deviation amounted to a shortfall of 1.18 mbd, or a 4.3% drop.
Considering healthy and even improving growth of oil production outside the OPEC+ group in October, the OPEC+ alliance again decided to postpone a scheduled production increase at its November 3 meeting. The producer group, which had planned to increase output gradually starting with a modest 180 kbd in December, announced that it would now start unwinding the extra voluntary cuts from January at the earliest. The alliance will hold its full bi-annual ministerial meeting on 1 December 2024 to review the market outlook and production policies for 2025. However, current balances on the oil market suggest that even if the OPEC+ cuts remain in place, global oil supply will exceed demand by more than 1 mbd next year.
While the OPEC estimated its total crude oil production in October at 26.53 mbd, both the IEA and the EIA reported higher numbers of cartel’s total supply of 26.97 mbd and 26.65 mbd, respectively. These prints imply a deviation of +435 kbd, or +1.64%, for the IEA, and +115 kbd, or +0.43%, for the EIA. While both agencies demonstrated positive deviations for the reported month, the IEA consistently showed a more pronounced overestimation of total OPEC crude oil output compared to the EIA. Thus, it was the first month over the recent 5 when the EIA estimated the total figure higher than the cartel itself. Relative to the OPEC, the IEA overestimated the output in countries like the U.A.E. and Iraq, while also underestimating production in regions like Nigeria and Libya. The EIA aligns more closely with OPEC but still exhibits notable deviations in specific cases.
Total oil production from non-OPEC states exhibited steady growth in October 2024, reflecting both short-term recovery and longer-term resilience. The output increased by 0.33 mbd compared to the prior month, representing a 0.5% MoM rise. This increment marked the fastest month-on-month expansion in three months, indicating renewed momentum after weak September statistics. On an annual basis, the non-OPEC production rose by 0.31 mbd, or +0.4% YoY, continuing an impressive 42-month streak of year-over-year expansion. Compared to the five-year average for October, the reported output was higher by 3.88 mbd, a 5.8% increase. This substantial margin above historical norms highlights the enduring growth capacities of non-OPEC producers, mainly in the Americas region.
The overall oil supply in the United States experienced a substantial increase in October 2024, fully offsetting the drop occurred in the previous month. The output built up by 335 kbd from the depressed level of September, representing a 1.5% MoM rise. This growth marked the new highest level of total production in the country observed ever and was also the most robust rate of growth in the last 7 months, suggesting a notable uptick in production dynamics after a period of slower growth. When comparing this figure to October 2023, the year-over-year dynamic was almost identical, with the total output up by 333 kbd, also reflecting a 1.5% YoY increase. This continuity in growth indicates a steady improvement in the U.S. oil sector, maintaining its upward momentum over the past 12 months. Moreover, the total U.S. production in October 2024 surpassed the five-year average for this month by 2.62 mbd, marking an impressive 12.9% increase. The rise in the total U.S. oil output within the month was driven by positive contributions from all key components of the production mix, including crude oil, natural gas liquids, renewable fuels, and processing gains.
U.S. shale oil supply experienced a marginal decline of 12 kbd in October 2024, marking a subtle 0.1% MoM decrease. Nevertheless, this marginal decline brought the shale oil production to its lowest level in 9 months and extended a two-month streak of monthly declines. Despite this recent softness, U.S. shale oil production remained robust on a year-over-year basis, registering an increase of 102 kbd, a 1.0% YoY growth compared to October 2023. Notably, however, this was the slowest annual expansion in the past 42 months, signaling a potential deceleration in the previously consistent upward trend. As for longer-term comparison, the reported October output was 1.0 mbd higher than the five-year average for this month of a year, reflecting a substantial 11.1% excess. Notwithstanding the recent softness, shale oil continued to dominate the U.S. crude oil production landscape, accounting for 74.68% of the total output.
The International Energy Agency (IEA) generally reiterated its previous forecast of global oil demand growth this and next year in its recent monthly report. According to the agency, with only six weeks left of the year, global oil demand is on track to expand by 920 kbd to an average 102.8 mbd in 2024, compared with growth close to 2.0 mbd last year and 1.2 mbd per year on average over 2000-2019. China’s marked slowdown has been the main drag on demand, with its growth this year expected to average just a tenth of the 1.4 mbd increase in 2023. Indeed, Chinese oil demand contracted for the 6th straight month in September – taking the 3Q24 average to 270 kbd below a year ago. By contrast, oil demand growth in advanced economies (OECD) reversed course, expanding by 230 kbd year-on-year in 3Q24. IEA’s estimate of world oil consumption growth for 2025 was essentially unchanged as well, remaining at 990 kbd. The sub-1 mbd growth pace for both years reflects below-par global economic conditions with the post-pandemic release of pent-up demand now complete. Rapid deployment of clean energy technologies is also increasingly displacing oil in transport and power generation, adding downward pressure to otherwise weak demand drivers.
The U.S. Energy Information Administration (EIA) also reported a notable decline in global oil consumption in October 2024, which contracted by 1.32 mbd compared to the previous month. This 1.3% month-over-month decrease marked the most pronounced monthly drop in 7 months and brought the demand to its lowest level in 5 months. Despite this short-term setback, the year-over-year comparison still has painted a positive dynamic, with the consumption rising by 1.00 mbd, or +1.0% YoY, over the same period last year. This growth continued a five-month streak of annual increases. Additionally, when juxtaposed with the five-year average for October, the global consumption stood 4.03 mbd higher, representing a solid 4.1% growth, underscoring the resilience of underlying demand in the broader historical context. Despite recent challenges, the non-OECD regions have remained the main driving force behind global longer-term oil demand growth, reflecting their ongoing industrialization and economic expansion, while the OECD nations exhibit steadier and more mature consumption patterns with intermittent fluctuations.
Global oil inventories plunged by 47.5 million barrels (mb) in September 2024, to their lowest level since January, led by a sharp draw in OECD oil products and non-OECD crude oil stocks, according to the preliminary data of the International Energy Agency (IEA). Meantime, total OECD commercial oil stocks fell by 36.4 mb to 2 799 mb during the same month, sinking 95.3 mb below the five-year average. Early October data suggest total global stocks continued to decrease for a 5th consecutive month.
Meantime, total oil inventories across OECD exhibited a modest uptick in August 2024, for which detailed data was revealed, rising by 0.5 million tons from July, which translates to a fractional growth rate of 0.1% MoM. Albeit marginal, this increase interrupted a two-month sequence of consecutive declines. In terms of momentum, it was the swiftest month-over-month increase observed in the past quarter. Nevertheless, on an annual basis, total OECD oil inventories registered a decline of 1.1 million tons compared to August 2023, representing a slight contraction of 0.2% YoY. When contextualized against the five-year average for the month, the total stockpiles were significantly lower, falling short by 44.3 million tons, or a pronounced 8.6% deficit, underscoring a broader trend of structural undersupply in recent years.
Total U.S. oil inventories experienced a notable contraction in October 2024, with stockpiles decreasing by 18.89 mb by contrast to the previous month, marking a 1.1% MoM decline. This drop represented a sharp reversal from the preceding 7 months of continuous buildup in stocks. The magnitude of this decline also stood out as the steepest monthly drop in a year. On a year-over-year basis, the total inventories, however, demonstrated a more positive trajectory, with an increase of 28.51 mb, equating to a 1.8% YoY rise, maintaining an upward trend for the past 6 months. However, when viewed in the context of the five-year average for October, total oil inventories in the United States remained substantially lower by 168.19 mb, reflecting a 9.3% shortfall. October 2024 again was marked by a distinct dichotomy in trends witnessed in two principal components of the total U.S. oil inventories. While the commercial inventories reflected significant recent declines, particularly in monthly terms, the government reserves (SPR) exhibited a measured recovery that has steadily gained momentum over an extended period.
Crude oil inventories at the Cushing storage hub in Oklahoma saw a notable recovery in October 2024, with stock levels rising by 1.69 mb from the previous month, a 7.1% MoM increase. This growth ended a 4-month streak of declines and marked the fastest monthly expansion in 8 months, signaling a shift in inventory dynamics after a prolonged contraction. Year-over-year, the stocks at the Cushing grew by 3.86 mb, recording an 18.0% YoY increase and the strongest annual gain in 10 months. Despite these positive dynamics, both in monthly and annual terms, the inventories remained 11.25 mb below the five-year average for October, reflecting a 30.7% deficit. This persistent gap underscores that while recent gains are encouraging, the hub’s recovery is far from complete.
Global oil inventories held on water experienced a significant contraction in October 2024, marking a 10.7% decline from the preceding month with a reduction of 7.04 mb, according to the data provided by Vortexa. This brought the global stockpile to its lowest level in nearly five years, reflecting a stark year-over-year drop of 25.3%, equivalent to 19.84 mb. Such figures illustrate a persistent downward trend in annual comparisons for 13 consecutive months. The deviation from the five-year average for October was also striking, with inventories falling short by 36.18 mb, or -38.2%, further highlighting the ongoing drawdown in global oil stocks. Across main regions, there was a broad-based tightening in floating oil inventories within the month, with Asia, the Middle East Gulf and West Africa leading the cutback.
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