The listing of Brent oil has taken a step up. The fear of the omikron variant of the coronavirus is slowly ebbing away. Analysts are mainly looking at the United States and the United Kingdom, where no new lockdowns are expected in the short term.
Brent crude oil prices closed at $20 per barrel on Monday, December 72,15, the lowest level in two weeks. In the days that followed, the market built momentum and started moving upwards. This resulted in a price of $23 per barrel on Thursday, December 76,65, the highest level since the outbreak of the omikron variant. However, on Friday December 24, a step back was taken. Brent oil is trading at $75,86 per barrel; This is probably because some speculators wanted to quickly cash in on the previous increase.
The price fluctuations of the last few days are - according to analysts - amplified because some of the traders are off during the holidays. As a result, fewer contracts are converted, which means that the market is more volatile. Purchasing or selling decisions made by a small group are less muted in the masses.
Oil companies invest less
For the long-term development of prices, experts are watching with interest the capacity expansion of oil companies in the United States. Oil cartel OPEC has a clear idea of what the price should be and controls production based on that. In the United States it is noticeable that oil companies are cautious about developing new sources.
But although the price is already at levels where the extraction of shale oil or tar sands becomes interesting, the oil giants prefer to reduce their debt position or pay out extra dividends. The political and social wishes to make the energy supply more sustainable also play a role in this.
Does gas price affect diesel price?
The diesel price initially dropped slightly this week, to €115,90 per 100 liters. The price has now recovered again. On Friday, December 24, the price is €118,52 per 100 liters. The high gas prices still have consequences for the diesel price. Diesel may be extracted from petroleum, but gas is sometimes also used in the production process. For example, various refineries use hydrogen to make fuel, including diesel, from the residual flows of the distillation process.
This hydrogen is extracted from natural gas. That is an expensive hobby given current gas prices. Some oil companies are now considering scaling down diesel production in decent installations. This mainly applies to refineries on the Mediterranean Sea, which - unlike Rotterdam or Antwerp - have fewer instruments to hedge against the high gas price.