Oil and other commodity

Crude prices in progress of a major correction

The latest peak of crude prices occurred in late September at $94 per barrel. I think it is now in progress of a major correction that will last about six months. I expected the prices will bottom out at end of March 2024, and could reach as low as $60/barrel.

1/ the two wars seems to be contained and the geopolitical risks are to be eased. The supply side of the crude is to improve.

2/ the global economies are further to slow down and even in recession in the coming quarters, thanks to the full impact on tight monetary policies phases in. The demand side of the crude is to be softened.

3/ the strength of the US dollar is soon to be pivot as the prospect of inflation control become more widely accepted and the market is expecting the Fed to cut policy rates starting from the second half of next year. The prices of crude in US dollar will be favourable when the US dollar drops.

4/ the dynamic transient of major oil price correction often takes about six months to complete. The time is related to the time needed for producers and consumers to respond to price changes.