The downward trend in the oil market has somewhat reversed this week. Demand for oil is decreasing, according to analysts because of the mediocre economic outlook. It is seriously considered that OPEC+ will pull out heavy guns next week to maintain the tightness in the oil market. In the diesel market, the strike at Total in France is putting the matter at a premium. According to the refinery, there is still enough diesel, but in practice it turned out slightly different.
The downward trend in oil prices initially appeared to continue this week. On Monday, September 26, Brent crude oil closed at $83,94 per barrel. That is the lowest quotation since the beginning of January. However, the mood quickly changed. On Wednesday, September 28, Brent had risen again to $89,03 per barrel. The price has now fallen slightly, but at $88,58 per barrel it still remains well above Monday's price. Brent oil is therefore roughly 8% lower this month than the price at the beginning of the month.
According to analysts, the moderate economic expectations are putting a brake on oil demand. This effect is further reinforced by the aggressive monetary policy of various banks. Raising interest rates to curb inflation comes at the expense of economic growth. The American central bank is also pushing up the dollar rate and since oil is usually paid for in dollars, oil for non-dollar countries becomes even more expensive. The oil market is therefore in a downturn.
Pump less oil
A falling oil price is not in the interests of oil-producing countries. Analysts are therefore already anticipating the measures that Opec+ will take in their monthly meeting next week. This month, the cartel already sent a signal to the market by reducing production quotas by 100.000 barrels per day. Opec+ is therefore pushing to keep the oil market tight. Several analysts expect production to be further reduced by 500.000 to 1 million barrels per day in October.
The Western sanctions against Russia have also not left the oil market unaffected. In response to the sham referendums in four eastern provinces of Ukraine, the EU wants to introduce, among other things, a price ceiling for Russian oil, committee chairman Von der Leyen announced this week. For that plan to really have an effect, it must receive support from India, China or Turkey. That support has not yet been forthcoming.
Strike makes diesel more expensive
The diesel price, like crude oil, also took a step up this week. From €144 per 100 liters on Tuesday, September 27, the price rose to €150,05 on Thursday, September 29. Today (Friday September 30) the price has dropped slightly to €148,60 per 100 liters. Within Europe, the diesel market has been significantly disrupted by strikes in France. Employees at TotalEnergies have now stopped work for the fourth day in a row. This puts a considerable strain on the already tight fuel market. According to Total, there is sufficient stock and fuel is still being imported, so an acute shortage is not an issue, a company spokesperson told Reuters.
France's largest sugar producer Tereos paints a different picture. This sugar factory provides diesel for the farmers' tractors and trucks for transporting the beets to the factory. However, Total will no longer supply diesel to Tereos this week. The company has now found replacement diesel, but has had to adjust its production planning due to problems with the supply of diesel.