The listing for Brent oil has taken off. Concerns about the omikron variant of the coronavirus have caused unrest in the market. Contrary to analysts' expectations, OPEC+ has not been fooled by the developments. It sticks to the strategy.
The price of Brent oil appeared to stabilize at $29 per barrel on Monday, November 73,45, after the free fall before the weekend. However, this was short-lived. In the following days, the price dropped to $1 per barrel on Wednesday, December 68,96. The price has now gained slightly; On Friday, December 3, the price of Brent oil is $72,24 per barrel.
Almost all analysts agree on the cause of the sharp drop in oil prices. This can be attributed one to one to the new corona variant discovered in South Africa. Several countries, including the United Kingdom, the Netherlands, Japan and Israel, almost immediately introduced restrictions to prevent the spread of the omikron variant. Concerns about the consequences for the economy and restrictions in aviation (and therefore falling demand for fuel) kept the market in its grip.
Maintain strategy
The news that OPEC+ released on Thursday, December 2, created some excitement on the market. The cartel postponed the meeting for one day to take into account recent developments. OPEC+ has decided to stick to its planned production increase of 400.000 barrels per day in January. There is a lot going on. "We are monitoring developments and the consequences for the market and will take action if necessary," the cartel writes.
The cartel expects a surplus in the coming months. It assumes a surplus of 2 million barrels for January, 3,4 million barrels for February and 3,8 million barrels for March, leaked via Reuters. But according to analysts, OPEC+'s decision to stick to its strategy shows that there is confidence in the market, despite the hit to the price.
Diesel also down
The diesel price also fell this week. This follows the example of crude oil. On Friday, November 26, the price stood at €120,88 per 100 liters. That is now €114,96 per 100 liters. There are several reasons why the diesel price is falling less quickly than the oil price. On the one hand, a large part of the fuel price is determined by taxes and duties; they don't go down. On the other hand, the oil companies have discovered that demand remains intact even with high prices at the pump. Now that prices are falling again, they are carefully increasing their margins.