Oil: Navigating the OPEC+ Quandary

Crude oil prices experienced turbulence post the OPEC and allies’ meeting on 30 November, with voluntary production cuts falling short of market expectations.

Saudi Arabia extended its cuts, but uncertainties around unanimous compliance and limited cuts in Q1 2024 raise concerns. With the absence of further reductions and a looming surplus in 1H24, this will potentially pressure Brent prices to below $80 per barrel.

WTI dropped to $75.96 per barrel, while Brent saw a slight increase to $82.83 per barrel.

Gas: US Trends and European Dynamics

The US gas market witnessed a 3.3% dip in front-month Henry Hub futures, influenced by rising stockpiles and warmer weather forecasts.

In Europe, despite colder conditions, gas fundamentals remain bearish with storage levels at 96.5% of capacity, reflected in TTF futures at €41.88 per MWh.

Ethane: Stability Amidst Pricing Fluctuations

Mont Belvieu ethane prices stabilized at around 20.56 cpg, showcasing a return to normalcy after summer volatility. Prices nearing 20 cpg, coupled with shrinking ethane frac spreads, indicate subdued extraction economics. Operators cautiously await downstream recovery for improved margins.

Propane: Persistent Weakness and Market Dynamics

Mont Belvieu non-TET barrel prices rose to 68.00 cpg, but the propane market grapples with prolonged weakness. High inventories, declining exports, and an unprecedented propane-to-WTI ratio underline multifaceted challenges in an oversupplied market.

Naphtha: Asian Market Challenges

Asia naphtha prices rose to $675 per metric ton, influenced by crude oil upticks. However, naphtha crack spreads hover at -11.1 dollars per barrel, signaling challenges for naphtha crackers. A sluggish demand recovery in the petrochemical chain anticipates continued reductions in naphtha demand.

Authors

Tracy Cui
Associate Director, Energy Insights

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