• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 22 hours "What’s In Store For Europe In 2023?" By the CIA (aka RFE/RL as a ruse to deceive readers)
  • 6 days America should go after China but it should be done in a wise way.
  • 12 days Does Toyota Know Something That We Don’t?
  • 1 day World could get rid of Putin and Russia but nobody is bold enough
  • 23 hours How Far Have We Really Gotten With Alternative Energy
  • 19 mins Even Shell Agrees with Climate Change!
  • 2 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
  • 4 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in

Breaking News:

OPEC Lifts Production in February

Solar Stocks Rally on Optimistic Guidance 

Solar Stocks Rally on Optimistic Guidance 

The solar sector has snapped…

Green Chemistry Breakthrough: Researchers Create Ethylene from CO2

Green Chemistry Breakthrough: Researchers Create Ethylene from CO2

University of Cincinnati engineers have…

OPEC+ Spare Capacity To Keep Oil Prices In Check

HSBC Global Research has predicted that Brent crude prices will remain range-bound at $75 per barrel to $85 per barrel in the mid-term as with spare production capacity by OPEC+ enough to offset any geopolitical risks. According to HSBC, OPEC+ will see its spare production capacity increase to 4.5 million b/d at the end of 2024,  up from 4.3 million b/d at the end of 2023, which should be enough to dampen price spikes.

"Trade disruptions in the Red Sea add only a marginal premium to oil prices and no physical supplies have been lost so far," the analysts have said.

Oil prices have also come under pressure after interest rates reversed their earlier trajectory and the U.S. dollar strengthened. Commercial interest rates have been ticking higher over uncertainty regarding the timing and magnitude of the expected rate cuts by the Federal Reserve. The 10-year Treasury has gained nearly 40 basis points since the final week of 2023 to the current yield of 4.147% while the U.S. dollar index has gained nearly 3%. 

At its last meeting held in December, the Fed announced that it would perform a series of interest rate cuts in the current year with its two-year battle against inflation nearly won. However, the markets don’t see the cuts coming before soon and have priced in a 71.4% likelihood of at least a quarter-point cut in March with a total of seven cuts expected in the course of the year.

However, Wall Street is less optimistic and has tempered its expectations of the number of rate cuts. To wit, Goldman Sachs has predicted the Fed will only make five cuts while Bank of America and UBS have predicted we will see only four cuts.

"The Fed will start cutting the funds rate soon, most likely in March. After all, Chair Powell said at the Dec. 13 press conference that the committee would want to cut 'well before' inflation falls to 2%. However, we expect 'only' five cuts this year, below the six-to-seven cuts now discounted in market pricing, and we view the chance of 50 basis point steps as low," Goldman Sachs has said.

By Alex Kimani for Oilprice.com

More Top Reads From Oilprice.com:

Join the discussion | Back to homepage

Leave a comment
  • Mamdouh Salameh on January 24 2024 said:
    OPEC Plus’ spare production capacity doesn’t currently exceed 2.0-2.5 million barrels a day (mbd) and not 4.3 mbd as the author mentioned.

    The reason is that neither the Saudi voluntary production cut of 1.0 mbd since June last year is a real cut since it can’t produce anyway nor are the voluntary cuts which some OPEC members promised last year to implement this year. They have never been implemented.

    This reduces the author’s figure of 4.3 mbd of spare capacity by at least 2..0 mbd.

    Even the current estimated spare capacity of 2.0-2.5 mbd can never be reproduced since many members of OPEC who made these cuts 2-3 years ago like Nigeria, Angola and even Iraq could hardly reproduce them.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News