Before the first ten days of November, international crude oil prices rebounded strongly again. As of the close on November 4, the Brent settlement price reached a high of US$98.57/barrel, once again pointing to the US$100 mark. As time goes by, there is not much time left this year. So under the background that the crude oil market remains strong in November, where will the performance of international oil prices in December go?
Table 1 Overview of Brent futures price performance in December over the past five years
Looking at the past five years, it can be found that the overall performance of international oil prices in December was mainly stable and rising, with only a large decline in 2018. At that time, it was mainly due to Trump’s frequent bearish remarks on oil prices, and at the same time, trade disputes led to weak economic expectations. December 2021 will be mainly affected by emergencies, and market panic still exists after Omicron showed his power.
Judging from the main influencing factors in December in the past five years, we can find that some factors still apply to this year. In terms of positive factors, the main ones are OPEC’s stance on maintaining production cuts and the uncertainty of geopolitical risks, while the negative factors are mainly the pressure on the economic outlook, and industry players are still pessimistic.
The main focus of the market in December this year is that the West will promote and implement new sanctions against Russia. The United States, in collaboration with Western countries, plans to set a price ceiling on Russian oil, and the European Union plans to impose a complete embargo on Russian seaborne oil after December 5. Concerns about potential supply risks remain. However, the Federal Reserve may slow its interest rate hike to 50 basis points in December, and concerns about economic recession may be alleviated to a certain extent.
To sum up, the high level of international oil prices in December is a high-probability event, which may be easy to rise but difficult to fall. The supply-side tightening is expected to continue unabated, while the demand-side pressure may be eased. The implementation effect of Western sanctions against Russia will determine how much oil prices rise.