At Any Rate
Global Commodities: Right on cue
Jan 10, 2025
Oil prices are surging, hitting highs not seen in three months due to supply concerns and geopolitical tensions. Sanctions on Russian exports and harsh winter weather are tightening global inventories. The discussion shifts to China's economic backdrop, where proposed stimulus measures aim to combat deflationary trends and could impact travel and commodities markets. Experts forecast prices averaging $73 this year, with a potential dip below $70 in the last quarter.
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Quick takeaways
- Oil prices have surged due to supply disruption concerns from sanctions, cold weather, and improved sentiment around China's economic stimulus.
- Tightening sanctions on Russian and Iranian oil are reshaping global market dynamics, driving refiners in China and India to seek alternative sources.
Deep dives
Recent Trends in Oil Prices
Oil prices have shown a significant rally at the beginning of the year, with Brent prices rising nearly 10% from December 23rd to January 10th, reaching close to $80. This increase is attributed to several factors, including concerns over supply disruptions due to tightening sanctions and low oil stocks. The market's fundamentals are supportive, with long-term crude prices advancing across the curve, and prompt spreads trading at their widest levels since August. Despite these gains, there was a notable discrepancy between forecasted and realized prices throughout much of the previous year, primarily due to weak crude demand, particularly from China.
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