The oil price was quite balanced this week. Despite the weak performance of Chinese industry, the International Energy Agency (IAE) is sticking to its forecast that Chinese oil consumption will exceed demand in the second half of 2023. However, due to the weak economic situation, the market seems skeptical about the reading of the situation.
The oil price remained fairly stable last week. On Thursday, May 11, the oil price was $74,98 per barrel. A day later (on Friday, May 12), Brent oil recorded the lowest level of the week. On that day, oil traded at $74,17. On Wednesday, November 17, the market was back to square one and the oil price fluctuated around $75.
The market is currently taking stock between expected higher demand in the second half of 2023 and the weak economic situation. Despite the weak performance of the Chinese industry, the International Energy Agency (IEA) maintains its forecasts for the second half of 2023. The agency predicts that oil demand in the second half of the year will be more than 2 million barrels higher than the offer. The agency is taking into account OPEC+'s decision to cut production by 1,16 million barrels. But strong expected growth of the Chinese economy is the main motivation for his statement. The IEA also maintains that China is responsible for 60% of growth.
Market views report with skepticism
However, it does not seem that the market accepts the IEA's position. Contrary to the normal dynamics of the market, the publication of the report did not lead to an increase in the Brent quotation. In recent weeks, optimism about Chinese recovery appears to have largely disappeared. Chinese industry grew by only 3%, considerably less than expected. Analysts from several large financial institutions indicate that they are currently mainly looking at the current market situation and see little reason for optimism. The performance of Western economies in particular is currently weak and this clearly has an impact on oil consumption.
According to the latest estimate from the American Petroleum Institute, US oil supplies increased by 3,6 million barrels. A major setback, because the market expected a drop of 900.000 barrels.
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The diesel price is also going through a stable phase. Through trial and error, the diesel price moved by less than 50 cents over the week. On Thursday, May 11, diesel traded for €110,73 per 100 liters. On Tuesday, May 15, the Diesel price was at the lowest point of the week and the price fell to €108,47. On Wednesday, May 17, the diesel price was just below the starting price of the week at €110,25.