Oil Supply Remains Tight as Non-OPEC Output Helps Offset Disruptions

Global oil supply is still recovering after months of disruptions caused by fighting between the US and Iran reduced flows through the Strait of Hormuz, a crucial shipping route for crude. Exports from the strait have increased since interim agreements were reached, but they remain below pre-conflict levels, according to the International Energy Agency. Output in major producing countries is also being curtailed due to earlier shutdowns.

Despite these challenges, non-OPEC output in the Americas has helped offset the shortfall, and strategic stocks have been replenished somewhat. However, commercial inventories in some countries are still lower than normal, a sign of ongoing supply tightness. Oil demand has softened due to higher prices and a sluggish industrial sector, but seasonal demand is picking up in the Northern Hemisphere.

Natural gas markets have also been affected by conservation efforts and fuel switching in Asia, where imports were constrained by reduced flows from Qatar and the UAE. However, the US natural gas market has been shielded by high production and comfortable storage levels. Looking ahead to 2024, global demand for natural gas is expected to fall marginally, with US demand forecast to decline slightly as well.

The technical analysis of natural gas prices shows a recovery that is facing strong Fibonacci resistance at $2.756. WTI crude oil has recovered strongly and is now positioned above its key moving averages, but faces resistance at $84.75. Brent crude oil is also recovering after buyers stepped in around the $80.63 Fibonacci base.