Oil prices will end 2023 around 10% lower, the first annual decline in two years, after geopolitical concerns, production cuts and global measures to rein in inflation triggered fluctuations in prices.
Brent crude futures were up 48 cents, or 0.6%, at $77.63 a barrel at 05:23 GMT on Friday, the last trading day of 2023. West Texas Intermediate (WTI) crude futures were up 37 cents, or 0.5%, at $72.14.
Large companies thought to stop using Red Sea routes after the Houthi militant group in Yemen started targeting ships. However, oil prices on Friday stabilized after falling 3% the previous day as more shipping companies prepared to transit the Red Sea route due to security precautions taken by some leading countries.
Still, both indicators are on track to close at their lowest year-end levels since 2020, when the COVID-19 pandemic hurt demand and prices plummeted.
OPEC+’s production cuts were insufficient to support prices; The indicators are down almost 20% from this year’s high.
Oil’s weak year-end performance contrasts with global equities on track to finish 2023 higher. The MSCI stock index, which tracks stocks in 47 countries, has risen nearly 20% since the beginning of the year as investors raised expectations for rapid interest rate cuts by the Federal Reserve next year.
The dollar has lagged in the foreign exchange market, heading for a 2% decline this year after two years of strong gains.
Industry officials say interest rate cuts are expected to reduce consumer borrowing costs in major consumption regions and a weak dollar that makes oil cheaper for foreign buyers could boost demand in 2024.
One study predicts that Brent crude oil, which rose above $100 in 2022 after Russia invaded Ukraine and averaged over $80 this year, will average $84.43 per barrel in 2024.
