The oil price seems to have passed its peak for the time being. Since the top price in mid-April, the price of oil is down $7. Disappointing results from the Chinese industry in particular are the cause of the decline. In addition, the diesel price continues to fall due to the weak European economy.
The oil price is moving back around $80 per barrel. On Thursday, April 20, Brent crude was trading at $81,10 per barrel. On Monday, April 24, the oil price was at its highest point of the week, at $82,73. After that, the oil price fell sharply. By Wednesday, April 26, oil prices had fallen below $80.
This has wiped out approximately half of the price increase caused by OPEC+'s production decline. Due to lower demand, OPEC countries and Russia decided to cut their oil production by 1,16 million barrels in early April. As a result of the decision, oil prices rose from less than $73 in mid-March to $87 in mid-April.
The fact that oil cannot maintain its price is mainly the result of disappointing results from the Chinese economy. With Western economies going through a weak phase, optimism about the recovering Chinese economy has been the main source of upward price pressure on the oil market. According to recent figures from the Chinese government, the Asian country's economy has increased by 5% compared to 2022.
This means that the economy is exactly on schedule to achieve the government's goals. Yet the oil markets have reacted with disappointment. The growth of Chinese industry is much lower at 3% due to lower demand from the West. According to analysts, this observation has led to negative sentiment on the oil market. In fact, Chinese industry is one of the world's largest drivers of global oil demand.
Diesel prices still down
On Thursday, April 20, diesel traded for €113,51. Since then, the price of diesel has fallen even further. On Monday April 24, the diesel price was at the lowest point of the week, at €112,32. On Wednesday April 26, the diesel price was €112,55.
The diesel price is still not responding to the price increase that the oil market has experienced in about a month. Since mid-March, the price of the Brent benchmark has risen from just under $73 to over $80. Meanwhile, the diesel price actually fell from about €122 to about €112. The main reason for the difference between developments in the oil and diesel markets is the weak economy. As a result of an increasingly difficult economy, demand from industry and suppliers is currently low and the European oil industry is noticing this. For example, European refiners told Reuters that sales volumes have been declining all year.
The price of diesel may not remain so cheap for long. The cabinet is currently discussing a measure that will increase the price of fuel. There is currently a plan by Minister of Climate and Energy Rob Jetten to add biofuels to petrol and diesel. According to expert estimates, this will increase the price of fuels by 5 to 10 cents.