The oil market remains highly susceptible to price-driving factors. The price of a barrel of Brent-Oil jumped this week and is now back at the highest level since the end of March. Where did this revival come from?
There are rumors that Shanghai is about to lift the strict lockdown after two months. When the corona measures are scrapped, traffic activities in China's metropolis will logically increase again, and with it the demand for oil also increases. Demand for oil will also increase in the United States and Europe as the tourist season approaches.
Oil on the rise
These prospects give the oil price a boost, especially now that corona is no longer a limiting factor. In the US, demand for oil is 10% to 15% higher during the summer months, analysts say. The price of a barrel of Brent oil was already on the rise last week and that trend continued this week. With a price increase of more than $5, the closing price yesterday reached more than $117, the highest level since mid-March.
Where demand increases, inventories decrease. The US Energy Agency (EIA) reported late last week that commercial oil inventories had fallen by 1 million barrels to 419,8 million. This is 14% below the five-year average for this time of year.
G7 is increasing pressure
There may be some relief on the market next week. On Thursday, June 2, OPEC (including Russia) will meet again to coordinate production volumes. The expectation is that it will then be decided to increase daily production in July by 432.000 barrels, as was previously decided for June and May.
In the run-up to the meeting, the G7 called on the Opec cartel to take responsibility to combat high energy costs. This increases the pressure, although it is not expected that the oil tap will open wide. After all, the OPEC countries benefit from the high oil prices. Not least Russia, to finance the war in Ukraine now that the economy there is likely to take a major hit.