Nov’24 Brent Futures flat price climbed this afternoon from $71.76/bbl at 12:00 BST to $72.50/bbl at 17:25 BST (time of writing). The increase in crude prices comes as players wait and watch for further directional cues ahead of the Fed meeting on 18 Sep. The market is still hindered by bearish sentiment, however, amid demand worries in China and offline capacity in the Gulf of Mexico. In the news today, there has been much speculation as to whether the Fed will cut by 25 or 50 basis points. This will mark the first US interest rate cut since March 2020. Proponents of the view that the Fed will cut by 50 bps include Michael Feroli, analyst at JPMorgan, and Bill Dudley, the former New York Fed president and Bloomberg columnist. In contrast, Satyam Panday, chief US economist at S&P Global Ratings, foresees three cuts of 25 bps, one every Fed meeting for the rest of the year. Whichever way the Fed chooses to move on rates (25 or 50 bps), it is clear that the consensus is looking for a cut in the Sep/Nov and Dec meetings. In other news, in a note by Callum Bruce, Goldman Sachs has commented on oil price weakness, with Brent slipping below $70/bbl last week. Goldman Sachs claimed that Brent crude could recover to $77/bbl in Q4 ’24, on the condition that demand concerns abate, positioning and valuation recover, and OECD inventories remain somewhat below normal. However, their analysis also highlights the risk of comfortable inventory levels allowing the market to price in an expected 2025 supply surplus, potentially hampering recovery of crude prices. At the time of writing, the front month (Nov/Dec’24) and six-month (Nov/May’25) Brent futures spreads are at $0.60/bbl and $1.51/bbl, respectively.
