Oil prices fell slightly this week. The lower rating followed weak economic data from several major economies. News on the supply side of the market is also driving the oil price down, although this is not yet noticeable on the oil market.
The downward movement in the oil market continues. On Thursday, August 17, oil traded at $84,12 per barrel. Brent oil briefly became a bit more expensive. On Friday, August 18, the oil price was at the highest level of the week, at $84,80. After that, the oil price continued to fall. At the time of writing (Thursday, August 24), oil was trading at $82,94.
The listing responds to new global economic data. Several major economies are writing red figures and the contraction appears to be greater than expected almost everywhere. A recent report from credit rating agency Standard and Poor's (S&P) shows that the American economy is slowly but surely starting to stagnate. The United States PMI fell to 50,4. When a PMI is higher than 50, the economy is growing. If the figure is lower, there is shrinkage. The lower the figure, the more the economy rolls backwards. The expectation is that the contraction of Japanese industry has not yet reached its trough. In addition to production, the number of orders has also fallen sharply. In July a PMI of 52 was measured.
The figures in the eurozone are also lower than market expectations. The eurozone PMI has fallen to 47, the lowest level since the height of the corona crisis. The eurozone economy is declining much faster than market expectations. A month earlier, the PMI was still 48,6 according to S&P. The market expectation was a drop to 48,5. The disappointing result is the result of a sharp decline in the services sector. The European economy itself is having such a hard time that doubts have arisen as to whether the ECB will increase interest rates in September. After the news came out, the value of the euro fell by 0,3% against the euro.
Supply is growing
The news on the supply side of the market is also putting pressure on the oil price. According to the Iranian Oil Minister, Iranian oil production will rise to 3,4 million barrels per day in September, a slight increase. In the long term, however, the news is not without significance. Less than two years ago, Iran produced only 2,4 million barrels of oil. In addition, US President Joe Biden is preparing a proposal to ease sanctions on Venezuelan oil. The question remains whether Venezuela will accept the proposal. The United States is demanding that the Venezuelan electoral system be reformed into 'a free and open democracy'.
The diesel price does not seem to respond to the oil price and is actually increasing week on week. On Thursday, August 17, diesel was trading for €134,40 per hundred liters. Then the diesel price rose. On Thursday, August 21, diesel was at its highest point of the week, at €137,96. Since then, the diesel price has fallen slightly and, given developments in the oil market, this trend should continue in the coming days.