The “turbulent ride” in petrol prices is unlikely to end next year, with continued volatility predicted for the global oil market.
OPEC+ production cuts, concerns about shipping in the Red Sea and uncertainty about the Chinese economy still feature among the many global issues affecting oil prices and therefore petrol prices.
NRMA spokesman Peter Khoury said global oil prices were highly volatile this year amid sustained production cuts by Saudi Arabia, Russia and other members of OPEC+.
“Unfortunately there’s no sight of any kind of stability,” Mr Khoury said.
“All of the volatility that we took out of 2023 we’ll be entering 2024 with on our backs still.”
Petrol prices in Brisbane, Sydney, Melbourne, Adelaide and Perth broke records in September as oil prices peaked following the OPEC+ production cuts.
Mr Khoury said record levels of oil production from the US and other non-OPEC producing nations, coupled with ongoing uncertainty over the Chinese economy, had later helped put downward pressure on prices and delivered petrol pump relief for motorists before Christmas.
“Having said that, it’s still been a highly volatile year. We saw a massive spike in June, and we broke last year’s record,” he said.
“It’s always been a volatile market, but coming out of Covid, then Russia’s invasion of Ukraine and the subsequent, pretty aggressive supply strategies being used by those oil-producing nations, it’s just added to that volatility.
“It’s hard to remember a time when the market was this volatile for such an extended period.”
Compare the Market spokesman Chris Ford said 2023 was an “expensive year” for petrol.
“It’s been a bit of a turbulent ride. We’ve seen some really big highs,” Mr Ford said.
He noted Brisbane had the highest metro average for the year, reaching 233.9c a litre for regular unleaded in October.
Mr Ford said the direction of petrol prices in 2024 would depend on several factors affecting supply and demand, including any economic slowdown and further OPEC production cuts.
He said the Russian invasion of Ukraine last year had a big impact on oil and transportation costs, and the conflict in Gaza was now another factor.
“We haven’t seen a huge shift in oil prices because of that, but there’s definitely some nervousness,” he said, also pointing to the concerns over Red Sea transportation routes.
As always, the direction of oil prices will be the main driver of petrol prices.
“We’re only really going to see meaningful, cheaper prices on the boards when oil prices come off,” Mr Ford said.
Oil prices stabilised on Thursday as concerns over disruptions to shipping in the Red Sea eased, with major shipping companies expecting to return to the route after a temporary halt due to attacks by Yemen’s Iran-backed Houthi militia.
Brent crude was trading above $US79 a barrel and West Texas Intermediate futures were about $US74.
Several analysts had updated their oil price forecasts in the lead-up to Christmas.
UBS cut its average 2024 Brent oil price to $US82 a barrel, which analyst Tom Allen said reflected rising inventories globally due to stronger than expected non-OPEC production growth.
Goldman Sachs analysts now expect Brent crude to be between $US70 and $90 a barrel next year on the back of strong production in the US, and forecast only moderate price volatility in 2024.
Mr Khoury said the Red Sea remained an issue to watch, and said market watchers were also waiting to see how Saudi Arabia and Russia responded to the increased US production.
“There’s a multitude of global factors which we’re still dealing with post-Covid, since the immediate period of coming out of Covid lockdown, and it looks like none of those are going to go away in 2024,” he said.
NRMA analysis showed that Brisbane was the nation’s most expensive capital city for petrol prices in 2023 with an average price of 193.4c a litre for regular unleaded, while Perth was the cheapest at 183.9c.
According to Compare the Market, average prices for regular unleaded peaked in Brisbane at $2.34 a litre in October while the highs reached in September were $2.28 in Adelaide, $2.25 in Melbourne, $2.23 in Perth and $2.20 in Sydney.
With both oil and petrol prices falling since September, Mr Ford said that relief for motorists could continue if wholesale prices stayed low. “If all of these things do stay the same, and that’s a big if, then hopefully we see prices settle below $2 through 2024,” he said. “But there are so many factors there that could nudge it above once again.”
Mr Ford noted diesel prices were also tracking down across major capitals, hovering at around a national average of $1.93 on Thursday, down from highs of $2.30 in September.
“That’s potentially good news for inflation, as so much depends on transportation costs and much of Australian transport still relies on diesel,” he said.
Extracted in full from: https://www.theaustralian.com.au/business/retail/more-turbulence-ahead-for-petrol-prices-as-global-oil-volatility-continues/news-story/ae25d257a83ecacdceaa26186bc1d9ff