Oil prices have risen sharply this week. Positive price pressure can be found mainly on the supply side of the market. Slowly but surely, the oil market is starting to notice that the global oil supply is lower due to the production decline of OPEC +. In addition, the demand for crude oil also seems to be increasing due to the approaching holiday season.
The benchmark Brent price is up about 4% this week. On Thursday, May 18, oil traded at $75,86 per barrel. A day later, the oil price was at its lowest point of the week, at $75,58. After that, the oil price rose by almost $3. On Wednesday the 24th, a barrel of crude oil was sold at $78,36.
The increase in oil prices appears to be mainly caused by the supply side of the market. Slowly but surely, the market is starting to notice that OPEC+ has scaled down production. To raise oil prices, the oil cartel reduced production by 1,16 million barrels per day at the beginning of this month. Until recently, the reduction had little effect, but slowly but surely the market is starting to notice that the supply is lower.
However, OPEC+ does not yet seem satisfied with the effects of their intervention. At Bloomberg's Qatar Economic Forum, Saudi Energy Minister Abdulaziz bin Salman hinted that Saudi Arabia is not yet satisfied with the current price level. The minister stated that he is about to hurt investors with short positions on the oil market. With OPEC's next meeting taking place next week on Sunday, June 4, analysts expect Abdulaziz to hint at a bigger production drop.
The US situation is also causing an increase
On the supply side of the market, the situation in the United States in particular is giving the Brent quotation a boost. US oil supplies have fallen by 12,46 million barrels, according to figures from the US Energy Agency (EIA). This meant that stocks fell much more than expected. The EIA forecast a decline of 0,78 million barrels. A surprising outcome, because American oil reserves grew throughout 2023.
According to analysts, the increase follows greater demand. The market is anticipating the start of the holiday season. As a result of the upcoming wanderlust, consumption of petrol, diesel and kerosene will increase substantially in the coming months. To meet the rising demand, the refineries are operating at maximum capacity.
The diesel price remained approximately stable this week. On Thursday, May 18, large quantities of diesel (from 4.000 liters) were traded for €110,25 per 100 liters. Between May 20 and 22, the quotation was at its highest point of the week. At that time the diesel price was €112. According to the last available quote from Thursday, May 24, the diesel price is currently €111,37.