Crude oil futures prices witnessed a significant decline during the Asian session on Friday. This decline came against the backdrop of several economic factors that affected the global market. On the New York Mercantile Exchange, December crude oil contracts were traded at $68.23 per barrel, recording a decrease of 0.68% from the previous day.
Earlier in the session, the contracts recorded a low of $68.22, reflecting sharp volatility in the market. Crude oil is expected to face support levels at $66.94, while it could face resistance levels at $70.56 per barrel.
Factors affecting the decline in prices
The role of the dollar index in the movements of crude oil prices cannot be overlooked. The dollar index, which measures the performance of the US currency against a basket of six other major currencies, fell by 0.10% to settle at $106.71. This decline in the value of the dollar is a factor influencing oil price movements.
as the decline in the dollar increases the attractiveness of crude oil for investors dealing in other currencies.
On the other hand, Brent oil futures prices for January also decreased by 0.69%, to trade at $72.06 per barrel. It is worth noting that the spread between Brent oil and crude oil prices widened to $3.83 per barrel, reflecting the difference in quality and characteristics between the two types.
Volatility in crude oil markets and future prospects
Crude oil markets continue to face significant volatility, reflecting the uncertainty prevailing in global markets. While some believe that markets may find support from certain economic developments, others believe that the market may face further pressure if geopolitical tensions continue or sudden changes in major economic policies occur.
For example, the impact of political and economic crises in some oil-producing countries, such as the United States and Russia.
Analysts’ forecasts for oil markets
Developments in oil markets should be closely monitored over the coming period, as many analysts expect oil prices to continue their current volatility. While some believe that markets may recover and rise again with improved economic prospects in some regions.
others point out that factors affecting supply and demand may put more pressure on prices.
Among these factors, changes in oil policies in some producing countries, in addition to the level of global production and demand, are considered the most prominent drivers that determine the market’s path. Changes in the US dollar prices may also contribute to determining oil trends in the near future.
Relatively stable or moderate rise: Many analysts expect oil prices to continue to fluctuate continuously in short term.
with slight upward movements driven by production cuts by OPEC+, geopolitical concerns.
and increasing demand from some major markets such as China and India. However, prices are expected to remain range-bound, especially in light of expectations of increased supply from shale oil producers in the United States. Long-Term Outlook
Expect significant price volatility: In the long term, many analysts suggest that oil markets will continue to experience sharp volatility due to changes in demand and supply.
especially with the global shift towards alternative energy sources. At the same time, increasing demand for oil in emerging market economies (such as India and China) may keep prices at relatively high levels, but environmental challenges may lead to reduced demand in developed countries.
Concerns over rising US production
With regard to US production, market may face further challenges if shale oil production continues to rise. Increased US production could lead to more crude oil flowing into markets, increasing pressure on prices. On the other hand, decisions by the OPEC+ alliance may help determine production levels that may contribute to price stability.
Changes in OPEC+ policy
It could have major impacts on global markets, as this group plays a major role in determining the level of global oil production and prices. Here are some of the potential impacts of changes in OPEC+ policy:
1: Impact on global oil prices
Increasing production If OPEC+ decides to increase oil production, this could lead to a surplus in supply, leading to lower oil prices. This could be beneficial for consumers and reduce energy costs globally.
but it could harm economies that depend on oil revenues such as Saudi Arabia and Russia.
Cutting production On the other hand, if OPEC+ decides to cut production in order to support prices, this could raise global oil prices. This could negatively affect energy-consuming economies such as major industrialized countries.
2: Impact on major economies
Consuming countries: Higher oil prices due to OPEC+ production cuts could lead to higher energy costs.
which would boost inflation rates in major countries such as the United States and the European Union. This could hinder economic growth and increase pressure on central banks to intervene by raising interest rates to combat inflation.
Oil-producing countries: In contrast, oil-exporting countries such as Saudi Arabia and Russia may benefit from higher prices if OPEC+ decides to cut production. This will boost their revenues, helping to finance their development projects or face financial challenges.
3: Impact on investments in renewable energy
Fossil fuel support: If oil prices rise as a result of OPEC+ production cuts, this may reduce the incentives to invest in renewable energy and alternative technologies. As the world increasingly looks to shift to clean energy, high oil prices may keep some countries dependent on fossil fuels.
Green transition pressure: In some cases, higher oil prices may encourage countries and companies to look for alternative energy sources.
