Oil price will reach $100 in 2024? Expert analysis and which are the best brokers for trading it

Technical Forecasts for Oil Prices 2024 and 2025

• By studying the weekly chart of oil prices, we find that the price began a long-term upward trend after the big and sudden drop that the world witnessed in oil prices around this time of year in 2020, when the futures contracts recorded prices below zero, and thereafter the prices rebounded significantly to reach the peak recorded at $126.34 per barrel.

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Since the peak registration, and also over two years, leading to our current day, we observe that the price undergoes downward corrections to the mentioned rise, where it has previously exceeded the 23.6% Fibonacci level and is settling below it, and has previously attempted to break the 38.2% level but did not settle for long below it, to continue with recovery attempts.

A Positive Composition Supporting the Chances of a Rebound

We notice through the chart that while the price is making its recovery attempts, it has recorded rising bottom levels, presenting signals on the price's direction to regain the main upward trend anew, attempting to stop the downward corrective pressure, supported by the Stochastic indicator's release from the negative momentum and heading towards oversold areas.

Negative Signals Now Emerging

On the shorter time frames, we notice that the price is undergoing a downward correction for the upward wave that started at the end of last year, approaching the 38.2% level located at $80.10, breaking it will push the price to suffer short-term losses beginning at $77.75 and extending to $75.40.

The General Path and Critical Levels

Overall, we see that the long-term upward trend is still ongoing, but it needs to consolidate above the $78.25 level, which is under threat from the previously mentioned negative technical factors, as breaking this level will cause an extension in oil price losses and further bearish corrections, while consolidation above it represents the key to resuming the main upward trend and heading to achieve gains that start with testing the $96.60 per barrel areas.

On the other hand, we point out that surpassing the positive level mentioned will complete forming an ascending technical pattern that has the ability to refresh the long-term upward wave significantly, directing it towards achieving new positive goals that begin by surpassing the psychological barrier of $100 per barrel and then rushing towards the $110.00 and then $118.00 areas.

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Fundamental Forecasts for Oil Prices for 2024 and 2025

Global oil prices rose nearly 15% in the quarter ending last March, continuing to climb in April until they managed to record the highest level in six months, due to geopolitical tensions in the Middle East, and escalating

fears of supply disruptions from the largest oil-producing region in the world.

This clear rise in global oil prices so far in 2024 has prompted some institutions and banks to expect the continuation of the rise and exceed the $100 per barrel mark this year.

Perhaps the lack of spending in the oil sector on the production increase necessary to meet global demand will in turn be one of the factors driving the rise in prices, and this shortage in production capacity may become a major problem this year.

"Goldman Sachs" group said: that by May, it is expected that the oil markets will shift to a supply deficit compared to the volume of demand, which means the need to use more unused production capacity by global producers, which will in turn reflect positively on global oil prices.

"Energy Aspects" company stated: that the supply side is now the biggest driver for oil prices, we have seen a decent number of weak supply elements, while global demand is generally healthy.

The U.S. Energy Agency expects oil production during the first half of 2024 to drop to levels below global consumption, which will contribute to increasing

the withdrawal from global inventories to meet demand, putting upward pressures on crude prices.

The International Energy Agency expects the extension of OPEC+ production cuts during

the second quarter of 2024 to reduce global oil supplies in the short term.

The Major Challenges Facing Oil Prices in 2024

The crude oil market faces several challenges in 2024 that may severely affect its prices, including the following:

Continuing Geopolitical Uncertainty:

• The war in Ukraine and tensions in the Middle East cast their shadows on oil markets, leading to significant price fluctuations.
• The war in Ukraine continues with no clear solutions in sight, keeping oil prices in a state of uncertainty.
• China escalates its sovereignty claims over Taiwan, raising fears of a war between the two countries.
• Many countries impose sanctions on some oil-producing countries.

Global Economic Slowdown:

• The slowdown in global economic growth could lead to a decrease in fuel demand.
• Many of the world's major economies face the risks of recession this year, casting a gloomy shadow over oil demand forecasts and price declines.

Increased Production from Non-OPEC Members:

• Some non-OPEC+ countries, such as the United States and Canada, seek to increase their oil production. This could lead to an exacerbation of the market surplus and negatively impact prices.

Shift Toward Renewable Energy:

• Many countries aim to reduce their dependence on fossil fuels and transition to renewable energy sources.
• This shift toward renewable energy over the long term could lead to a decrease in oil demand and negative price pressures.

Concerns About Climate Change:

• Concerns about climate change lead to increased pressures on governments and companies to reduce carbon emissions. These pressures may lead to restrictions on oil use and a decline in demand and prices.

Brief Analyses and Forecasts for Oil Prices

• Oil Price Forecasts This Week: Oil prices may continue their ascent that started last week if U.S. crude inventories continue to decline.
• Oil Price Forecasts in May: Global oil prices may register new higher levels in several months, especially if geopolitical tensions flare up again in the Middle East.
• Oil Price Forecasts for 2024: If oil prices succeed in surpassing the $95 per barrel mark, the ascent will continue until reaching the more important barrier at $100 per barrel.
• Silver Price Forecasts for 2025: The upcoming year 2025 could be the year that oil prices register levels higher than the $100 per barrel mark, especially if the clear decline in spending on global production increase continues.

Geopolitical Tensions

Global geopolitical tensions play an important role in affecting crude oil prices, and are among the main factors determining its future directions. The most prominent geopolitical tensions affecting oil prices include:

1. The War in Ukraine
   • The most significant geopolitical factor currently affecting oil prices is the war in Ukraine.
   • This war has caused disruptions in oil and gas supplies from the Black Sea region, leading to a severe shortage in the global oil supply.
   • Oil prices significantly increased after the war began, with Brent crude exceeding $130 per barrel in March 2023.
   • The war continues with no clear solutions in sight, keeping oil prices in a state of significant fluctuations and uncertainty.
2. Tensions in the Middle East
   • The Middle East is one of the most important oil-producing regions in the world, so any disturbances in this region directly affect oil prices.
   • The region is currently experiencing several hotspots, such as the war in Syria, Iranian threats, and tensions between Israel and Lebanon.
   • These tensions increase fears of supply disruptions and rising prices.
3. The Conflict between China and Taiwan
   • Taiwan is an important oil and gas exporter, so any conflict between China and Taiwan would significantly affect global energy prices.
   • China is escalating its sovereignty claims over Taiwan, raising fears of a war between the two countries, which would involve Western countries led by the United States.
   • Any war between China and Taiwan could lead to significant disruptions in oil supplies and a massive increase in prices.
4. International Sanctions
   • Many countries, led by the United States, impose sanctions on some oil-producing countries, such as Russia, Iran, and Venezuela.
   • These sanctions lead to a reduction in oil supplies from these countries, contributing to price increases.
   • Sanctions are one of the political pressure tools used by countries to achieve their political goals.
   • New sanctions could lead to increased volatility in oil markets and rising prices.

OPEC+ Cuts

OPEC+ alliance announced early last March that the voluntary production cuts of 2.2 million barrels per day, which were planned to end by the end of the first quarter of this year, will continue until the end of the second quarter.

Saudi Cuts

Saudi Arabia, the largest oil producer in the OPEC+ alliance, announced its commitment to voluntary production cuts of 1 million barrels per day, which will continue until the end of the second quarter of 2024.

This decision aims to support global oil prices and balance the market, especially in light of geopolitical tensions and concerns about supply disruptions.

Russian Cuts

Russia, another key member of the OPEC+ alliance, also confirmed its commitment to production cuts, although it has been facing pressure to increase its output to take advantage of high oil prices.

However, Russia's decision to continue with production cuts indicates its willingness to cooperate with other oil-producing countries to stabilize the market and maintain price levels.

Forecasts for Global Supply in 2024

Global oil supply is expected to face several challenges in 2024, which may affect its levels and stability:

• Geopolitical Tensions: Geopolitical tensions in key oil-producing regions, such as the Middle East and Eastern Europe, could disrupt oil supplies and lead to fluctuations in global supply levels.
• Production Cuts: OPEC+ and other major oil-producing countries have announced production cuts to support prices and balance the market. However, the effectiveness of these cuts depends on various factors, including compliance and geopolitical developments.
• Investment in Exploration and Production: The level of investment in oil exploration and production projects will also play a crucial role in determining global supply levels. Lower investment due to economic uncertainties or environmental concerns may lead to supply shortages in the long term.
• Technology and Innovation: Advances in technology and innovation could impact global oil supply by improving extraction techniques and increasing efficiency. However, the extent of these impacts remains uncertain and depends on various factors, including regulatory frameworks and market dynamics.

Decline in Global Oil Inventories

Global oil inventories have been declining in recent months, reflecting the tightening of the oil market and supporting higher prices. Several factors contribute to this decline:

• Strong Demand: Global oil demand has been robust, driven by economic recovery and increased mobility following the easing of COVID-19 restrictions in many countries. Strong demand has led to inventory drawdowns as consumption outpaces production.
• Production Cuts: Production cuts by OPEC+ and other major oil-producing countries have also contributed to the decline in global oil inventories. These cuts have helped rebalance the market and prevent an oversupply of crude oil.
• Geopolitical Tensions: Geopolitical tensions in key oil-producing regions have raised concerns about supply disruptions, prompting traders and refiners to stockpile oil as a precautionary measure. This increased demand for oil has further depleted global inventories.

Forecasts for Global Demand in 2024

Global oil demand is expected to continue recovering in 2024, driven by economic growth and increasing mobility:

• Economic Recovery: The global economy is projected to rebound strongly from the COVID-19 pandemic, supported by fiscal stimulus measures and vaccination campaigns. As economic activity picks up, demand for oil is expected to increase across various sectors, including transportation, manufacturing, and construction.
• Transportation Sector: The transportation sector, which accounts for a significant portion of oil demand, is expected to rebound as travel restrictions ease and people resume commuting, traveling, and shipping goods. Increased mobility will lead to higher consumption of gasoline, diesel, and jet fuel.
• Industrial Sector: The industrial sector is also expected to drive oil demand growth, particularly in energy-intensive industries such as manufacturing, construction, and mining. As economic activity expands, the demand for oil and petroleum products used in industrial processes is expected to rise.
• Emerging Markets: Emerging markets, especially in Asia, are expected to be key drivers of oil demand growth in 2024. Rapid urbanization, industrialization, and infrastructure development in countries like China and India will drive up energy consumption and fuel demand.

OPEC Organization Forecasts for Global Demand

The Organization of the Petroleum Exporting Countries (OPEC) forecasts global oil demand to increase by around 4.5% in 2024, reaching an average of 101.6 million barrels per day (mb/d). This forecast reflects the expected recovery in global economic activity and the gradual normalization of oil consumption patterns.

OPEC expects the transportation sector to be the main driver of oil demand growth, particularly in emerging markets where rising incomes and expanding middle classes are driving up vehicle ownership and travel demand. The industrial sector is also expected to contribute to demand growth, supported by infrastructure projects and manufacturing activities.

The Most Common Questions About Oil Prices

Oil prices are subject to various factors and can be influenced by a wide range of economic, geopolitical, and market-specific events. Some of the most common questions about oil prices include:

• What Causes Oil Prices to Fluctuate? Oil prices can fluctuate due to changes in supply and demand dynamics, geopolitical tensions, economic indicators, weather events, and market speculation. For example, disruptions in oil production, such as conflicts in key oil-producing regions or hurricanes affecting oil infrastructure, can lead to supply shortages and price spikes.
• How Do Geopolitical Events Affect Oil Prices? Geopolitical events, such as wars, conflicts, and sanctions, can have a significant impact on oil prices by disrupting supply chains, reducing production capacity, and creating uncertainty in the market. For example, tensions in the Middle East, which is a major oil-producing region, can lead to fears of supply disruptions and cause prices to spike. Similarly, sanctions imposed on oil-producing countries can limit their ability to export oil, leading to reduced supply and higher prices.
• What Role Does OPEC Play in Influencing Oil Prices? The Organization of the Petroleum Exporting Countries (OPEC) plays a crucial role in influencing oil prices through its decisions on production levels. OPEC member countries collectively produce a significant portion of the world's oil, and their agreements to increase or decrease production can directly impact global supply and prices. OPEC meetings and announcements regarding production targets often lead to price fluctuations as market participants assess the potential impact on supply and demand.
• How Does Economic Growth Affect Oil Prices? Economic growth is closely correlated with oil demand, as increased economic activity typically leads to higher energy consumption. Strong economic growth can drive up demand for oil and other commodities, putting upward pressure on prices. Conversely, economic downturns or recessions can reduce demand for oil, leading to lower prices. Indicators such as gross domestic product (GDP) growth, industrial production, and consumer spending are closely monitored by market participants for signs of economic health and their potential impact on oil prices.
• What Is the Relationship Between Oil Prices and Inflation? Oil prices can influence inflationary pressures in the economy, as they directly affect the cost of production and transportation for businesses. When oil prices rise, businesses may pass on higher costs to consumers in the form of increased prices for goods and services. This can lead to inflationary pressures, as consumers may experience higher overall price levels. Central banks and policymakers closely monitor oil prices as part of their efforts to manage inflation and maintain price stability.
• How Do Market Speculation and Investor Sentiment Impact Oil Prices? Market speculation and investor sentiment can also influence oil prices, sometimes leading to short-term volatility. Traders and investors may buy or sell oil futures contracts based on expectations of future price movements, geopolitical events, or changes in supply and demand fundamentals. Sentiment indicators, such as the number of long or short positions held by market participants, can provide insight into market sentiment and potential price direction. However, it's important to note that speculative activity may not always align with underlying supply and demand fundamentals, and excessive speculation can contribute to price instability.