Oil Market Report September 2024 Analysis
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The U.S. was the world’s leading producer of crude oil in 1960, the year OPEC was formed. While U.S. crude imports already totaled a million barrels per day, it was at prices set by the country’s internationally dominant oil companies and backed by import quotas. Arab members of OPEC would demonstrate oil exporters’ growing power in 1973 with a damaging oil embargo targeting the U.S. and other supporters of Israel in the West. The episode marked the peak of OPEC’s leverage over the oil markets amid rapidly declining U.S. production.
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At the same time, non-OPEC+ oil supply, led by the Americas, continues to make robust gains of around 1.5 mb/d this year and next. The United States, Brazil, Guyana and Canada are set to account for most of the increase, boosting output by over 1 mb/d both years, which will more than cover expected demand growth. Stock prices rise and fall based on future corporate earnings reports, intrinsic values, investor risk tolerances and a large number of other factors. Even though stock prices are commonly aggregated and lumped together, it is very possible that oil prices affect certain sectors much more dramatically than they affect others.
Oil Market Report Glossary
This should, if anything, cap upward pressures on crude oil prices, particularly if the crude oil market is operating near a competitive outcome (as it presently is). Of course, OPEC could always elect to use its monopoly power to extract part of the increase in product prices but—given OPEC’s recent stance towards demand—this does not appear to be the case. Bottlenecks could also affect crude prices through expectations by promoting heightened perceptions of generalized shortages.
Notably, the course of the ongoing Middle East conflict and OPEC+ members’ willingness to adhere to voluntary production cuts remain major uncertainties to short-term oil supply and price forecast. In November 2024, Donald Trump won the US presidential election by a landslide. On one hand, Trump declared his intention to once again wield tariffs, posing a significant blow to global trade and creating a macroeconomic downside for 2025 oil demand.
With alternative fuels available, the ability of the OPEC cartel to influence the market price of oil is reduced. This increases the chance that a member of OPEC will choose to break the agreement and supply more to the market. The disruption from new products affects the strategic interactions within the cartel, the incentive to supply alternatives, and the nature of demand for oil. Their study does not necessarily prove that the price of oil has a very limited impact on stock market prices; it does suggest, however, that analysts cannot really predict the way stocks react to changing oil prices. Despite a decrease in the number of active rigs, US crude oil production has been on the rise. Advances in horizontal drilling and hydraulic fracturing technologies have significantly increased well productivity, mitigating the lower activity level.
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The profits they make don’t all disappear – lots of ordinary people own shares in BP, Shell, and other global oil companies. Access more insights for the aerospace and defense, chemicals and specialty materials, engineering and construction, industrial manufacturing, mining and metals, oil and gas, power and utilities, and renewable energy sectors. For U.S. credit, yields are expected to stay high throughout 2025, and this could continue to attract strong demand and keep spreads at very tight levels. “The relative strength of U.S. growth versus other markets, as well as the expectation that U.S. policy will favor U.S. assets at the expense of other regions, are supportive of strong overseas demand for U.S. credit.
April’s Consumer Price Index (CPI) report is due Tuesday, followed by retail sales and the Producer Price Index (PPI) on Thursday. President Trump on Monday signed an executive order aimed at lowering prices on drugs sold in the US, after promising on social media to bring in cuts of at least 59%. The plans could end up raising prices overseas, boosting revenue for pharma companies, a White House official said, per Axios. In the commodities market, Bitcoin reached an all-time high, and gold prices surged to $3,338 per ounce, benefiting from safe-haven demand.
Even as profits declined in 2024, it returned $26.3 billion oil profit review to shareholders through dividends and buybacks. And firms can deduct more than 90% of the cost of new exploration and production from their windfall tax bills, significantly reducing what they have to pay. This was introduced in May 2022, and increased from 25% to 35% in November. It is now expected to raise around £40bn extra from all the companies operating in UK waters between 2022 and 2028.