Last Friday, although oil prices dipped slightly, their performance marked a second consecutive week of gains. This upward trend is somewhat constrained by the sluggish state of China’s economy. Despite the recent downturn, both major benchmarks – Brent and WTI Crude Oil – saw a rise of over 4% in the week, a notable turnaround from the position earlier in September when Brent crude fell below $69 for the first time in three years.
Recent price increases have been driven in part by the ongoing production outages in the Gulf of Mexico where around 6% of crude and 10% of natural gas production remain offline due to Hurricane Francine. In addition, a drop in US crude inventories to their lowest level in a year further supported rising prices.
Furthermore, China issued its third and final batch of fuel export quotas in 2024, keeping volumes consistent with previous years, indicating that refinery margins may not be sufficient to boost output.
On Monday, oil prices faced declines amid rising concerns over demand, thereby underwhelming business activity indicators from the eurozone and showcasing persistent weaknesses in the Chinese economy, contributing to a bearish market sentiment. The eurozone’s unexpected contraction stemmed from a stagnant services sector and a deteriorating manufacturing landscape.
This week, oil prices rallied to nearly a three-week high on Tuesday, driven by news of monetary stimulus from China and escalating tensions in the Middle East, which could disrupt regional supply. However, oil markets retraced some gains as it became evident that Hurricane Francine which threatened the US Gulf Coast would likely bypass key offshore production areas, primarily affecting Florida, which contributes 15% of the nation’s oil and 2% of natural gas.
In its latest monthly report, OPEC revised its medium and long-term forecasts for global oil demand, attributing expected growth to Africa, India, and the Middle East, alongside a slower transition to electric vehicles. OPEC anticipates that global oil demand could reach 118.9 million barrels per day (bpd) by 2045, an increase of 2.9 million bpd from last year’s projections. The forecast extends to 2050 predicting that demand will hit 120.1 million bpd.
Moreover, OPEC has raised its medium-term demand outlook, citing a more favourable economic landscape as inflationary pressures ease and central banks begin to lower interest rates. By 2028, global demand is projected to reach 111 million bpd, with an increase to 112.3 million bpd in 2029—an adjustment up by 800,000 bpd from prior estimates.
This outlook contrasts sharply with other industry forecasts; British Petroleum expects oil consumption to peak in 2025 and decline to 75 million bpd by 2050, while ExxonMobil predicts that demand will remain above 100 million bpd through 2050, reflecting current consumption levels.
In the past week, there has been a notable 3% increase in high-value cryptocurrency wallets, often referred to as ‘whale’ wallets. The trend, while intriguing, does not necessarily indicate the onset of a bull market. Various geopolitical conflicts are currently unfolding around the world, leading many to speculate that individuals may be turning to cryptocurrencies as a means to safeguard their assets.
In addition, former US President, Donald Trump, has publicly expressed his support for cryptocurrencies, asserting that he would promote their adoption when he returns to office. An endorsement that could influence market sentiment and investor behaviour in the coming months.
Focusing on recent market performance, Ether (ETH) has demonstrated remarkable strength, rallying by 18.7% between September 17 and September 23. This surge has positioned ETH ahead of Bitcoin (BTC) in terms of weekly gains. Indicators such as increased open interest, rising funding rates, and overall network growth suggest a robust demand for Ether.
As of the time of writing this report, Ether’s price has risen by 4%, trading at approximately $2,650. In comparison, Bitcoin was valued at $63,737, reflecting a more modest increase of 1.8%. Overall, the total cryptocurrency market capitalisation has experienced a 2% rise, reaching $2.3 trillion.
Last week, Ether outperformed Bitcoin, demonstrating a total increase of 17.5%, while Bitcoin’s price rose only 9.8%. This performance is further highlighted by the ETH/BTC trading ratio, which increased by approximately 7.5% in the last seven days, reaching a three-week high of 0.0424 on September 23. Following the upward trend in the ETH/BTC ratio, there is a clear indication of growing interest in Ether.
Moreover, data from mainstream crypto enthusiasts reveal a positive shift in the flow of funds into US-based spot Ethereum exchange-traded funds (ETFs), with minor inflows recorded at $5.2 million and $2.9 million on September 19 and September 20, respectively. However, despite this uptick, investment products related to Ethereum continue to lag behind those of Bitcoin. Major analysts report that Ethereum experienced outflows totaling $29 million from September 16 to September 20, marking Ether’s fifth consecutive week of negative flows.
It is worth noting that while the increase in ‘whale’ wallets and positive market movements for Ether suggest a growing interest in cryptocurrencies, caution is necessary following the ongoing geopolitical tensions and overall volatility of the market.
