Daily Spotlight: Oil Prices Stable Near $80

Summary

The current price of a barrel of the crude oil benchmark grade West Texas Intermediate has fallen below the $80 level, as we expected. That’s down from a high near $90 in April but still up 8% from the start of the year. We look for prices to stabilize at these levels for the next few quarters (even as global economic growth remains under pressure due to high interest rates) as future production rates are starting to be scaled back. We look for a barrel of West Texas Intermediate crude oil in 2024 to average $80, in line with last year’s average price of $80, with a trading range of $90-$70 for the year. The core drivers behind oil prices in the long term are indeed global demand and global supply. According to the U.S. Energy Information Administration, there was modest excess demand in 2023: global consumption was 101.9 million barrels per day, while global production was 101.8 million barrels. Forecasts for the balance of 2024 and 2025 now call for demand to exceed supply, which is likely to provide a floor to oil prices. Of course, there are always wild cards such as geopolitical developments, ranging from wars (i.e., Russia’s invasion of Ukraine), to sanctions (Iran, Venezuela), to turmoil in the