Can Geopolitical Changes and Tropical Storms Influence Crude Oil Prices in 2024?

Oil prices experienced a decline on Monday, retracting after four consecutive weeks of increases.

This downturn was partly influenced by the potential for a ceasefire agreement in the Gaza region, which has been mediated by Qatar and Egypt. Such diplomatic efforts, if successful, might alleviate some of the geopolitical tensions that have historically fueled market volatility.

Tony Sycamore, an analyst from IG in Sydney, noted, “If the ceasefire negotiations yield a solid outcome, we might see a temporary easing of the geopolitical premium currently factored into the market prices.”

Impact of Tropical Storm Beryl on U.S. Energy

As Tropical Storm Beryl approached, significant preventive measures were implemented across Texas, with major ports like Corpus Christi and Houston shutting down in anticipation. This storm, predicted to escalate into a Category 2 hurricane, poses a direct threat not just to offshore production but also to the onshore refinery infrastructure.

ING analysts, including Warren Patterson, observed, “Such disruptions in refinery operations are likely to bolster refined product cracks, affecting overall market stability.”

Market Outlook Amid Environmental and Political Shifts

Last week, WTI crude witnessed a 2.1% gain following an Energy Information Administration report that showed a decrease in both crude and refined product stockpiles. “WTI has rallied impressively, up 15% from its early June lows,” Sycamore remarked, suggesting potential resistance around the $85.50 to $87.50 range.

The oil market was also buoyed by anticipations of interest rate cuts in response to slowing inflation and job growth, hinting at possible boosts in economic activity and oil demand.

Moreover, recent elections in the UK, France, and Iran could also have far-reaching impacts on global energy policies and geopolitical dynamics, adding another layer of complexity to market forecasts.

These factors collectively paint a picture of an oil market at a crossroads, influenced by both natural events and geopolitical developments.

Technical Analysis of Current Oil Trends