Geopolitical events and concerns about China's recovery led to a volatile year for oil prices (BZ=F, CL=F) in 2023. Rebecca Babin, CIBC Private Wealth, US Senior Energy Trader joins Yahoo Finance Live to weigh in on what the major catalysts for oil will be in 2024.

“The key for 2024 is going to be ‘what does US supply do?’” Babin says, pointing out how US oil production outpaced estimates. If the US continues to produce at that pace, Babin warns, there could be an over-supply. For 2024, in addition to US production, Babin advises investors to keep an eye on China and Iran.

Follow along with Yahoo Finance's 2024 Investor Guide for more expert insight, or click here to watch this full episode of Yahoo Finance Live.

Video Transcript

- The oil industry is on pace to end the year in negative territory despite the recent gains we've seen in oil prices on an improved macro environment and an escalation in the Red Sea. The supply and demand mismatch that shaped the first half of 2023 has inverted, oil price is down 2.5% this year now. So what can we expect from the oil industry in the new year? For more on oil markets, we're joined by Rebecca Babin US Senior Energy Trader for CIBC, Private Wealth as part of Yahoo Finance's 2024 Investor Guide. What is going to be from your perspective the major catalyst for oil in 2024 Rebecca?

REBECCA BABIN: So I think the key for 2024 is going to be what does US supply do? We saw this year in 2023, the big surprise outside of the geopolitical events that are taking place right now, was the production in the US massively outperforming expectations. US performed by 5, 600,000 barrels over what analysts had been expecting. Looking at 2024, the market looks very well balanced with 1.2 to 1.5 million barrels of demand growth projected, while at the same time, 1.2 to 1.4 million barrels of nonopec supply projected.

Now if the US continues to drag out these productivity gains in-- in efficiency gains and continues to outperform, the market will be oversupplied. So I think the key that people are looking at is, can the US continue to outperform? Does Iran, which has been ramping production and as the US has kind of turned a blind eye to some of their sanctions continue to ramp? And importantly, what happens in China on the demand side?

So those are the keys and I think the-- the other thing I would highlight is that expectations for 2024 are very modest. Most analysts say, I see Brent between 80 and 90, I don't see anything extreme, and and-- I think that set up actually gives us some lead way to the upside, if things start to perform better, if demand comes in better, and US supply is somewhat contained. So I think the negative sentiment is a little bit of a tailwind to a market that's very fearful about oversupply from-- particularly, from the United States.