Opposing signals are emerging in the oil market. Crude oil stocks have not yet been exaggerated and are even declining somewhat in the US. The stock of gasoline in the US, on the other hand, did increase. This is a signal as consumers can no longer or do not want to pay the high prices for fuel.
The quotation of Brent crude oil showed a significant recovery at the beginning of this week after the price drop, with the price for a barrel of crude oil falling below $100 per barrel for the first time in months. On Tuesday, July 19, Brent crude oil closed at $107,31 per barrel. However, that recovery appears to be short-lived. Yesterday (Thursday, July 21), Brent crude oil closed at $104,15 per barrel.
The price drop is partly driven by the inventory figures from the US Energy Information Administration. The report sent conflicting signals. On the one hand, supplies of crude oil and oil distillates have declined. On the other hand, gasoline supplies in the US have increased. The latter is seen by experts as a strong signal that demand for oil products could fall quickly. According to some analysts, consumers apparently cannot or do not want to pay these prices. In the background, the fear of a recession continues to play a role and thus less demand for oil in the long term.
Additional production
Analysts are closely monitoring developments in oil production in Libya. There is talk of ramping up production. The North African country has long been a major supplier of oil to the world market. Due to a revolution and the subsequent unrest that culminated in a civil war, production has fallen sharply in the past ten years. Several wells have been shut down, partly due to arguments about where the oil dollars should be transferred and how that money should then be distributed. Now that the oil price is at a relatively high level, various parties realize that Libya is therefore missing out on a lot of money. Depending on how the market develops, Libya wants to pump more oil.
Further south in Africa, Congo wants to benefit from the high oil price. Earlier this year, Congo announced that it would auction sixteen oil concessions. Due to the war in Ukraine and its consequences on the oil market, Congo wants to pump more oil. This week the government announced that it would auction not sixteen but 27 oil and three gas concessions.
Unexpected effect
The European boycott on oil from Russia (which will not fully come into effect until December) has led to an increase in liquid bulk transport in the port of Rotterdam. There was 4,3% more crude oil transhipped in Rotterdam, according to the half-yearly figures published today (Friday, July 22). The growth was largely caused by the transport of Russian oil to India, the port authority writes in the explanation. In contrast, the transit of oil products decreased by 9,4%. Structurally less fuel has been imported and there has been less re-export. The most spectacular figure is the LNG transhipment. Due to the high demand, 45,8% more LNG arrived at the port.
The diesel price is in a downward trend this week. On Monday, July 18, the price was still €158,26 per 100 liters. That dropped to €22 per 151,33 liters on Friday 100 July. The decline in diesel prices therefore follows, with some delay, the movement that had already started on the crude oil market.