Oil prices have remained stable between $70-75/bbl for the last two months despite the chaos surrounding them. This stability might have just been disturbed by last week's US election, as President-elect Trump favours the USA pumping in more oil and filling in the Special Petroleum Reserve.
Before this, OPEC+ had already announced that it would delay its withdrawal of cuts until the end of December when demand data is clearer. This is crucial because recent announcements from China have resulted in some level of reversal in data, though it is early, signs are there. Thus, to keep the market balanced, it is important to have an overall view of demand and supply, as one-sided risk can result in a large cut or spike in price.
Within the same period, the crude oil volatility index (OVX) fell from 55 to 38. Even the net shorts by asset managers on the USA commodity exchange have increased to a record high since 2020.
Given the financial and market dynamics the risks are favoured at a new low for the year before the year's end. The only piece missing from the puzzle is the de-escalation of Israeli actions in Gaza and Lebanon.
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