Oil Market Update
U.S. crude oil prices fell on Tuesday, following the largest daily loss in two years. This week, oil prices have sharply decreased as geopolitical tensions in the Middle East appear to be easing.
Recent Developments
Traders expressed relief after Israel’s long-expected strikes on Iran last Friday did not impact the country’s oil and nuclear facilities. On Monday, the benchmark U.S. crude oil contract saw a decline of more than 6%, or $4.40, settling at $67.38 per barrel.
Despite the recent drop, Goldman Sachs analysts believe that current oil prices are undervalued in the short term. Daan Struyven, a Goldman Sachs analyst, noted on CNBC’s “Squawk Box” that demand is increasing due to the need to refill the U.S. Strategic Petroleum Reserve and the growing demands of the airline industry.
Closing Prices for Energy Commodities
Here’s a summary of the closing prices for major energy commodities on Tuesday:
West Texas Intermediate (WTI): December contract at $67.21 per barrel, down 17 cents or 0.25%. Year-to-date, U.S. crude oil has decreased by approximately 6%.
Brent Crude: December contract at $71.12 per barrel, down 30 cents or 0.42%. The global benchmark has fallen by more than 7% year-to-date.
RBOB Gasoline: November contract at $1.9518 per gallon, down 0.74%. Year-to-date, gasoline prices have retracted about 7%.
Natural Gas: November contract at $2.346 per thousand cubic feet, up 1.6%. Year-to-date, natural gas prices have declined by more than 6%.
Future Outlook
Goldman Sachs forecasts that the price of Brent crude could rebound to $77 per barrel in the fourth quarter, even in the absence of disruptions in oil supply from the Middle East. However, Struyven cautioned that risks for 2025 lean towards lower prices due to weak demand in China, robust U.S. production, and OPEC+’s plans to reintroduce crude oil to the market in December.
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