Gas Oil Uptrend Halts in the Short Term

The recent surge in crude oil prices encountered a temporary slowdown, with WTI stabilizing around $90 per gas oil barrel. Reports of increased production from Iran and Nigeria contributed to a rise in OPEC’s output by 120,000 barrels per day in September. However, OPEC data indicates a global deficit of about 3 million barrels per day in the fourth quarter.

With diminishing reserves, particularly in the US, this may affect demand dynamics. Currently, we’re in a corrective phase, with the first significant hurdles expected around the confluence of the support level and the upward trend line near $85 per barrel. If the upward momentum persists, the primary target for bulls remains the psychological barrier of $100 per barrel.

European Natural Gas Reserves Remain Robust as the Heating Season Approaches

Natural gas authority at the Dutch TTF has seen only modest increases recently, reflecting a period of replenishment. European Union countries appear well-prepared for the upcoming heating season, with warehouse filling levels averaging 95%. Additionally, reduced industrial activity and an unusually warm start to autumn are contributing factors in curbing price escalation. This suggests we’re unlikely to witness a repeat of last year’s challenges.

Our decreasing reliance on Russian supplies, constituting only about 15% of all imports, reinforces this sentiment. The ongoing local uptrend, in place since May, does not exhibit notable signs of robust demand. In the short term, the crucial resistance zone is currently situated around $45, and only a breakout from this level will pave the path toward the $60 neighbourhood.

Current Challenges Unlikely to Phase Out Long-Term Bulls

The short-term pause in oil price rises should not deter long-term energy bulls. Wood Mackenzie’s projections indicate that global investments in exploring new resources in the fractional distillation of crude oil will continue to rise. The overall increase will be marking a 5% year-on-year. The International Energy Agency predicts a record demand of 102.2 million barrels per day for this year, with further improvements anticipated in 2024.

Currently, a downward trend is moving towards the end of the decade due to the growth of renewable energy sources. Meanwhile, the march of demand-side influence on gas oil trading platforms has so far been halted. With high expectations for the next few years, this is an opportune moment to assess entry points in the fossil fuel industries.

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