WSJ Today on Crude Oil
Posted: Sat Nov 04, 2023 9:19 am
11/4/2023 9AM CST
Crude oil
Anyone with a gasoline-powered car or truck knows that oil prices have risen. A barrel of U.S. benchmark crude oil recently cost $82, up from $67 in March. But prices could easily go higher, analysts say.
Part of the recent increase is due to voluntary production cuts from both Saudi Arabia and Russia, two of the largest oil producers. “Those cuts are putting a lot of wind in the sails of the oil market,” says Stewart Glickman, an energy-stock analyst at New York financial-research company CFRA.
Another upside risk: If the recent conflict between Israel and Hamas spreads into the wider Middle East region, it could disrupt oil supplies and drive up prices. Even fear of that happening could do the same thing.
In addition, global demand for oil looks set to stay stable or grow in the immediate future. “American fuel consumption isn’t likely to change even if there is a delayed recession, as employment is high,” says Peter McNally, global head of sector analysts at London investment researcher Third Bridge. High employment means people will be driving to work.
An increase in electric-powered vehicles and hybrid cars might make a small difference in terms of reducing oil consumption, but such vehicles are still a fraction of the overall cars on the road globally—around 2%, according to data from Australia-based PD Insurance and the International Energy Agency. “It’s going to take a while before EVs or hybrids materially crimp oil consumption,” Glickman says.
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China, which has struggled economically in recent quarters, presents another possible demand driver, according to Glickman. Expectations for China’s potential growth trajectory are so low, even a mildly better-than-expected increase in energy demand from that country could lift oil prices, he says.
Glickman sees crude prices averaging between $95 and $100 in the near future.
Crude oil
Anyone with a gasoline-powered car or truck knows that oil prices have risen. A barrel of U.S. benchmark crude oil recently cost $82, up from $67 in March. But prices could easily go higher, analysts say.
Part of the recent increase is due to voluntary production cuts from both Saudi Arabia and Russia, two of the largest oil producers. “Those cuts are putting a lot of wind in the sails of the oil market,” says Stewart Glickman, an energy-stock analyst at New York financial-research company CFRA.
Another upside risk: If the recent conflict between Israel and Hamas spreads into the wider Middle East region, it could disrupt oil supplies and drive up prices. Even fear of that happening could do the same thing.
In addition, global demand for oil looks set to stay stable or grow in the immediate future. “American fuel consumption isn’t likely to change even if there is a delayed recession, as employment is high,” says Peter McNally, global head of sector analysts at London investment researcher Third Bridge. High employment means people will be driving to work.
An increase in electric-powered vehicles and hybrid cars might make a small difference in terms of reducing oil consumption, but such vehicles are still a fraction of the overall cars on the road globally—around 2%, according to data from Australia-based PD Insurance and the International Energy Agency. “It’s going to take a while before EVs or hybrids materially crimp oil consumption,” Glickman says.
Advertisement - Scroll to Continue
China, which has struggled economically in recent quarters, presents another possible demand driver, according to Glickman. Expectations for China’s potential growth trajectory are so low, even a mildly better-than-expected increase in energy demand from that country could lift oil prices, he says.
Glickman sees crude prices averaging between $95 and $100 in the near future.