Another rate hike by the US Fed was not enough to bring the oil prices down significantly. Rate hikes are not minor events. In most cases, such tightening around the world would surely have dented global oil prices significantly. Only that, the bear hopefuls may once again be in for another rude surprise. The supply side has not budged. And it continues to have more say despite repeated signals that are likely to hit demand.

Close market observers assert the slowdown in demand for the first half of 2023 has pretty much been priced in rate cuts and a strengthening dollar may cause jitters for a week at best, before normal service resumes. Tightening supply has been the center of oil price movement since the Ukraine-Russia war and Opec’s unity in lowering production and delivering it successfully over a sustained period – have lessened the weightage given to demand concerns, otherwise.

The likes of Goldman Sachs have called for oil at $115/bbl by the end of first quarter next year. While Goldman has been known to have a bullish bias, the overall sentiment is that of the oil price at least holding firm around $90-100/bbl – under most circumstances.

Opec has time and again shown resilience in the leadership of Saudi Arabia and Russia. The drawdown from US strategic reserves was only helpful to the extent of arresting the bull rally. That US crude inventories have been reported at new lows, and the drawdown from strategic reserves will not last forever – which makes the case for a firm oil price stronger.

The market imbalance has not gone away. The Opec cartel’s latest move shows it is ready to go any lengths to keep oil at or around what it considers “adequate for more investment”. From what it appears, oil prices are not softening anytime soon.