This Is How I See The Oil Market Playing Out For The Rest Of 2024

It's that time again. It's that time to make a forecast on the oil market with almost a high degree of confidence in getting it wrong, but hey, you can't fault me for trying.

There are a few central drivers in the oil market this year:

• Slowing US oil production.

• OPEC+ voluntary production cut unwinding.

• Global oil demand.

• US and China SPR release.

If you can get all 4 of these variables right, you will have a good grasp on the general direction of the oil market. The hardest variable to get right is global oil demand as demand is a moving target, while supplies are largely fixed.

Notice how I don't use geopolitics as a driver for the oil market? As we've been saying for a few weeks now, oil bulls should consider geopolitics to be nothing but a distraction. It takes away your focus on what's important, and in my view, considering the fundamentals we are seeing in oil, geopolitics will simply accelerate key trends rather than being a driver.

Price Outlook

My view on the oil price trajectory is that there will be no oil price spike this year. Instead, I think as the current oil price correction takes place (low $80s), oil market fundamentals will drive prices back to a higher structural range ($85 to $95). We should see oil trade rangebound in this range for the 2nd half of 2024 with a possibility of surprising to the upside by the end of 2025 depending on the US oil production outlook.