The oil price rose sharply for most of January, but this week the oil price found its way back down. Rising exports of Russian oil and unexpectedly high growth in US oil supplies depressed oil prices. Nevertheless, the fall in the oil price has also slowed somewhat. The OPEC Advisory Committee debunked the rumors about a possible increase in production.
On Friday, January 27, the price of Brent oil was at its highest point of the week. Oil was trading at $86,40 per barrel at the time. After that, the oil price fell almost constantly. On Thursday, February 2, the European oil price stood at $82,25.
An important reason for the falling oil price was an increased supply of Russian oil. At the beginning of December, Russian oil exports fell sharply due to the EU sanctions on Russian oil. Since December 5, 2022, EU countries are no longer allowed to import Russian oil by sea. As a result, Russia exported only 16 million barrels of oil on December 1,5, which is less than half of Russia's normal oil production. However, since last week, Russian oil exports have returned to pre-December levels at around 3,6 million barrels. The recovery is the result of larger imports from Asia. Last week, China and India imported a record volume of more than 3 million barrels of oil.
News from the United States is also putting pressure on oil prices. The American crude oil supply increased more than the American Energy Agency (EIA) had expected. The agency estimated that total oil supplies in the United States would increase by 376.000 barrels. Now that all the data is in, it appears that 4,14 million extra barrels were stored last week. As a result of the increase, oil prices fell by 3% in both the United States and Europe. The additional build-up of stocks not only ensures a greater supply, but also indicates lower oil consumption. This news hits hard, especially after last week, because at that time the tide on the American oil market seemed to be turning for a while. Last week it turned out that the build-up of American oil inventories was even lower than expected.
OPEC Advisory Committee
However, the decline in oil prices is also being slowed down somewhat. The OPEC advisory committee has decided not to increase oil production. Although additional production is not obvious due to the low oil price, there were rumors that OPEC would increase their oil production, according to the statement of three anonymous OPEC employees to CNBC.
The increase would be a prelude to increased Chinese oil demand. Analysts expect demand from the Asian superpower to increase significantly in the coming months now that most corona measures have been abolished. The growth of global oil consumption is estimated at around 1,9 million barrels. However, according to the committee, growth is still too uncertain to increase oil production. In addition, due to Western sanctions against Russia, it remains uncertain how much Russian oil reaches the market. From February 5, EU countries will no longer be allowed to import oil products such as petrol or diesel by sea, in addition to crude oil.
The diesel price fell even more sharply than the oil price this week. On Friday, January 27, the diesel price was still €138,39 per 100 liters. On Thursday, February 2, the diesel price fell to €129,93.