After the upward price pressure that characterized most of June, oil prices fell this week. The reason seems to be mainly the result of negative sentiment among investors. But China also seems to be making an effort to push down the price of oil.
On Thursday, June 22, Brent crude was trading at $74,14 per barrel. The price of oil briefly rose. On Monday, June 26, the oil price reached its highest point of the week, at $74,18 per barrel. However, the next day the oil price lost $1,92. As a result of the decline, oil prices reached their lowest point of the week at $72,26 per barrel. The lower rating turned out to be short-lived. A day later, oil prices rebounded to $74,03 per barrel.
The brief increase at the beginning of the week is the result of the unrest in Russia. For a moment, leader of the mercenary army the Wagner group, Yevgeny Prigozhin, seemed to be seeking a confrontation with the Russian army. But within a day, Vladimir Putin managed to defuse the situation. When the situation quickly stabilized, price pressure quickly disappeared from the market. A day later, the oil price fell by almost $2 per barrel. There is no clearly identifiable cause for the lower rating. Analysts point out that concerns about low demand appear to be driving the price down.
It therefore appears that the invasion of Russia has postponed a decline that was already hanging over the market. The fact that the price almost completely recovered after one day is mainly the result of lower American oil inventories. In their weekly report, the American Petroleum Institute (EIA) found that American oil supplies have decreased by 9,6 million barrels. This is a significant step down, given the market's expectation that oil supplies would decrease by 1,76 million barrels. In addition, analysts cite OPEC+'s low production targets and Saudi Arabia's further cuts as reasons for the recovery.
China is pushing oil prices down
The geopolitical battle to determine the level of the oil price appears to be in full swing again. This time, OPEC+ does not have the United States as its opponent, but the cartel finds its opponent in America's biggest challenger on the world stage, China. As the world's major importer and consumer, the Asian country may have the most to gain from a low oil price.
China's tactics seem somewhat contradictory. The Chinese oil purchasing organization Unipec has sold a significant amount of its oil supply to the world market. This is quite an expensive operation, because in order to artificially lower the oil price, China has to sell their oil at a loss. So it appears that China is hoping to trade a short-term loss for a lower oil price in the long term. The hope for China seems to be that the sales campaign can prevent a permanent price increase from OPEC+. The main cause of the low oil price is also the reason why China wants to push the oil price further down. The Chinese industry is currently having a hard time. Growth figures have been disappointing since the spring and appear to be suffering increasingly from the Western economic malaise.
The diesel price has fallen more than the oil price this week. On June 22, diesel was trading at €114,34 per barrel. The diesel price then fell in fits and starts to a price of €111,12 per barrel. By the way, there comes within two days still a big step above. Due to an increase in excise duties, the price of diesel will rise by 1 cents on Saturday, June 9,9.