- Oil markets continue to be lackluster compared with the strength displayed by metals and gas markets.
- StanChart has predicted that the bearish sentiment coupled with low market volatility are likely to persist until OPEC+ announces its new policy.
- Experts have predicted that positive developments by OPEC+ could trigger another oil price rally.
- The 37th OPEC and non-OPEC Ministerial Meeting is scheduled to be held on June 1, 2024 in Vienna
Dynamics in the global oil markets have shown little change over the past couple of weeks with pessimism still high and hedge funds still leaning towards the short side of the market. Over the past week, Brent prices remained range-bound in the $83.45-83.60/bbl range with the prolonged sideways price movement pushing volatility lower. The realized annualized 30-trading-day front-month Brent volatility clocked in at just 16.9% at settlement on 20 May, a 2.1 ppt w/w reduction while the 10-trading-day volatility measure came in 7.4 ppt w/w lower at just 12.5%. Front-month Brent settled at $83.71/bbl on 20 May, good for a 0.35/bbl w/w increase but considerably lower than the $1.44/bbl increase predicted by Standard Chartered’s machine-learning oil price modeling tool, SCORPIO. Oil markets continue to be lackluster compared with the strength displayed by metals and gas markets. StanChart has predicted that the bearish sentiment coupled with low market volatility are likely to persist until OPEC+ announces its new policy during its next meeting scheduled for early June. However, StanChart notes that the exact timing of that unilateral announcement is uncertain because voluntary cuts are outside the scope of the OPEC+ ministerial meeting.
The experts have predicted that positive developments by OPEC+ could trigger another oil price rally.
The end of the early-year oil price rally has forced energy stocks to give up some gains. The sector has lost 5% over the past six weeks bringing its gains in the year-to-date to 11.46%. That said, Wall Street largely remains bullish on oil and gas stocks.