Posted on December 28, 2023 at 5:43 pmUpdated December 28, 2023 at 5:55 p.m
THE About 40 ends this Thursday in decline (-0.48% to 7,535.16 points), weighted by one of its heavyweights, TotalEnergies. The multinational company’s action was affected from the start of the morning by the announcement of an increase in oil inventories in the United States last week, while a decrease was expected according to the latest data published by the American Petroleum Institute.
Crude inventories rose by 1.84 million barrels in the week ended Dec. 22. On the other hand, a decrease was expected in the order of 2.7 million barrels, according to the Reuters consensus, which polled seven analysts. Inventories also rose by 1.57 million barrels at the Cushing terminal in Oklahoma, which houses the giant tanks of WTI stocks listed in New York.
A development that supports the idea that the balance of power between producer supply and consumer demand is out of balance at the end of the year. Lim Sin Kiat, an analyst at Kenanga Research, also believes that crude oil demand will remain the main concern of the oil market in 2024, mainly due to uncertainty over Chinese and US demand, rather than supply. By contrast, oil inventories fell more than expected for the week, by 6.9 million barrels versus an expected 2.9 million, according to IEA data released this afternoon. Without much impact on the price of black gold, Brent fell by 0.8% compared to the previous day.
Concerns about demand
Several OPEC+ members agreed last month to cut output by a total of 2.2 million barrels per day in the first quarter of 2024. Saudi Arabia, the world’s biggest oil exporter, will spearhead the effort. It will extend the cut of one million barrels per day for three months. But despite commitments made by the wider cartel over the year, Brent and WTI prices have fallen more than 20% since their peak in late September, weighed down by record US oil output and fears of weaker global demand.
Finally, TotalEnergies lost 1.7%, bottom Cac 40, pre Engie (-1.3%) a Dassault Systemes (-1.1%). On the contrary, Teleperformance gained 0.7% and L’Oreal 0.6%.
In New York, the main indexes rose slightly, around 0.2%. But the time has come for 2024 and the Fed’s other monetary policy decisions. The expected rate cut will depend on the development of inflation, which is still far from the Federal Reserve’s 2% target, and on the “soft landing” scenario in the United States that operators are hoping for.
An example from 1994
Examples of economies emerging from a Federal Reserve tightening cycle without entering recession are rare. Most often cited and today taken over in the article v The Wall Street Journalis a series of key rate hikes in 1994 that saw the interest rate rise in just over a year from 3% to 6% in March 1995. By comparison, the Fed raised its federal funds target range from 0-0.25% to 5.25 -5.50% today, even more sharply than in 1994. The US economy responded by slowing in the mid-1990s without going into recession, with gross domestic product growth not falling below 2.2% in one year at the end of 1995 .
After falling 1.5% in 1994, the S&P 500 jumped more than 34% the following year and never retreated until the dot-com bubble burst in 2000. We could still experience a recession late next year, but in that case it would be a monetary policy error on the part of the Federal Reserve to not ease soon enough. ,” said Jason Draho, head of asset allocation for the Americas at UBS Global Wealth Management, also quoted The Wall Street Journal.