In the oil market, traders are keenly awaiting a series of crucial US economic indicators this week, with the October Consumer Price Index (CPI) due for release later today. Comments from Federal Reserve Chair, Jerome Powell, along with remarks from other key officials, are also expected to shape market sentiment.
Oil prices remained near a two-week low on Tuesday, following a sharp 5% drop over the preceding two trading sessions. The continued decline in prices has been attributed to multiple factors, including persistent geopolitical tensions in the Middle East, OPEC’s recent downward revision of its global oil demand forecasts for 2024 and 2025, a strengthening US dollar, and a mild market reaction to China’s latest stimulus measures.
OPEC’s latest monthly report marked its fourth consecutive downward revision, now forecasting global oil demand growth of 1.82 million barrels per day (bpd) for 2024, down from the 1.93 million bpd forecast issued just a month earlier. The 2025 demand growth forecast was in like manner adjusted, with the new estimate of 1.54 million bpd representing a reduction from 1.64 million bpd. This downbeat projection highlights the challenges facing OPEC+, leading to a postponement of their planned output increase in December amid persistent price weakness.
Despite these revisions, OPEC’s demand growth forecast remains more optimistic than other industry projections, particularly those from the International Energy Agency (IEA), which is anticipating a more reduced growth number. Notably, OPEC has a more positive view of demand from China, in contrast to other analysts who have downgraded their expectations in light of the country’s economic performance and the effectiveness of its fiscal stimulus measures.
Adding further pressure to oil prices, the US dollar surged to a four-month high, supported by growing investor confidence following the results of the US presidential election. No doubt, an increase in the value of the dollar makes oil more expensive for buyers in other currencies, which could tone down global demand.
Oil prices dipped on Friday, with both WTI and Brent crude benchmarks falling by over 2%. Market sentiment was notably weighed down by the announcement of China’s latest stimulus package during the National People’s Congress, which failed to meet trader expectations.
Also, the US Gulf of Mexico’s energy production was notably affected by Hurricane Rafael, according to a statement from the Bureau of Safety and Environmental Enforcement (BSEE). As a precaution, 23% of crude oil output and 10% of natural gas production were suspended. The storm prompted evacuations from dozens of offshore platforms, temporarily halting approximately 408,830 bpd of oil production and nearly 201 million cubic feet per day of natural gas extraction.
Major producers, including Chevron, Equinor, and Shell, have all evacuated personnel from their offshore facilities. It is expected that it will take several days for production to return to normal, as companies assess the condition of their facilities and ensure the safe re-entry of workers.
In other news, the Biden administration completed its final purchase of oil for the Strategic Petroleum Reserve (SPR) on Friday, after selling a record amount of oil from the reserve in 2022. This final purchase involved 2.4 million barrels, to be delivered to the SPR’s Bryan Mound site in Texas between April and May 2024. Overall, the administration has repurchased 59 million barrels at an average price below $76 per barrel—well below the $95 per barrel sale price in 2022—resulting in an estimated profit of $3.5 billion, according to the Department of Energy.
Despite the reduced inventory, the US remains the world’s leading producer of oil and natural gas, thanks to technological advances like fracking and horizontal drilling, which have significantly enhanced its energy security compared to the 1970s, when the SPR was created as the world’s largest emergency oil reserve in response to the Arab oil embargo.
As anticipated, the outcome of the U.S. presidential election, with Donald Trump emerging victorious, has sent seismic ripples through global financial markets, creating an environment of volatility and opportunity. Among the most notable effects has been the dramatic rise of Bitcoin, which has soared to a new all-time high of $89,864 this week, further solidifying its status as a leading asset in the global market.
At this moment, Bitcoin sits comfortably at number 9 on the list of the largest assets by market capitalisation worldwide. With a market value of $1.723 trillion at the time of writing, Bitcoin has overtaken Meta (formerly Facebook) by more than $300 billion in a matter of just seven days. This surge represents a significant milestone for Bitcoin, reflecting the growing recognition of cryptocurrencies as formidable financial assets that can no longer be ignored or dismissed. The rise of Bitcoin marks a pivotal shift in the landscape of capital markets, positioning cryptocurrency as a major player in the global economy and one that is obviously here to stay.
In addition to Bitcoin’s impressive performance, another major development in the crypto space has been the rapid growth of BlackRock’s Bitcoin Exchange-Traded Fund (ETF). In a striking turn of events, BlackRock’s Bitcoin ETF has now surpassed the size of traditional gold ETFs in terms of assets under management. The flood of institutional capital into Bitcoin was further highlighted by a staggering $1.1 billion inflow in a single day—immediately following the concession of Kamala Harris. This influx demonstrates the increasing institutional confidence in Bitcoin as a legitimate and attractive asset class, one that institutions are eager to gain exposure to, especially in a period marked by political and economic uncertainty. The fact that such a significant financial powerhouse like BlackRock has embraced Bitcoin at this scale signals that the cryptocurrency market is evolving into a fully recognized and vital segment of the broader investment landscape.
Meanwhile, Ethereum, although still short of its previous all-time high of over $4,000, has seen substantial movement, with its price pushing beyond its most recent resistance levels of around $2,600. This upward momentum reflects growing investor confidence in Ethereum’s long-term potential, particularly as it continues to be the foundational
blockchain for decentralised finance (DeFi), smart contracts, and a rapidly expanding ecosystem of decentralised applications (dApps). But perhaps the most telling sign of Ethereum’s rising dominance is its market capitalisation, which has now surpassed that of one of America’s largest financial institutions—Bank of America. With a market cap of $380 billion, Ethereum is now valued higher than Bank of America, which currently stands at around $351 billion. This represents a dramatic shift in the perception of cryptocurrencies and blockchain technology, highlighting Ethereum’s increasing role as a cornerstone in the evolving digital economy.
These developments represent a major shift in the financial markets, one where digital assets like Bitcoin and Ethereum are no longer fringe players or speculative assets, but are now recognised as substantial forces in the global economic system. Institutional investment is flowing into cryptocurrency at an unprecedented rate, and the market capitalisation of these assets continues to rise, pushing them into the realm of mainstream financial instruments. The significant milestones achieved by Bitcoin, Ethereum, and the rise of Bitcoin ETFs demonstrate that cryptocurrency is not just a passing trend, but a transformative force reshaping global finance, one that is set to have lasting effects on traditional markets, investment strategies, and the future of money itself.
Most importantly, this shift is not just about price surges or technological innovation, but about the changing nature of financial systems themselves, with digital assets playing an increasingly central role in shaping the global economy.
