The oil price has fallen considerably this week. Weak economic data from China and a lower forecast from the World Bank put pressure on the oil market. However, sentiment changed on Wednesday, September 1, after the relief of US sanctions on Venezuelan oil came under threat.
The oil price turned out to be quite volatile and has fallen against the trend of recent weeks. On Thursday, October 27, oil was still charged at $89,20 per barrel. By Tuesday, October 31, the price had fallen to $85,02. On Wednesday, November 1, the Brent benchmark was slightly higher, at around €86,50.
Disappointing economic figures from China in particular are putting pressure on oil prices. After a weak first half of the year, China had a strong third quarter. As a result, the market seemed confident that China would achieve its 5% growth target. However, contrary to expectations, China's manufacturing industry shrank in October. This is evident from the so-called Purchasing Managers' Index (PMI), which remains at 49,5 points this month. An indication below 50 means the industry is contracting, while a PMI above 50 indicates an increase. The fact that the economy is slowing down is not entirely unexpected. In August a PMI of 51,7 was measured, but in October the figure fell to 50,6. There was a slight increase in the expectation of the market, with a PMI of 50,2.
In addition, a new forecast from the World Bank is putting significant pressure on the oil price. The World Bank estimates the average oil price for the fourth quarter of 2023 at $90 and the international organization expects the price to fall to around $2024 in the first quarter of 81. The main reason for the lower forecast is lower than expected economic growth. Yet the World Bank offers a nuance. If the war in Israel escalates into an interstate conflict, the price could rise significantly. In case of slight escalation, the bank predicts an increase to between $93 and $102. If the conflict really escalates completely, prices could easily fall between $140 and $157.
Sanctions relief on the way
Uncertainty about the relief of US sanctions on Venezuelan oil caused slight upward price pressure on Wednesday, November 1. The United States imposed one essential condition for enlightenment. Venezuela should ensure democratic reforms. However, it seems that the South American country has broken that condition. On Tuesday, October 30, the Venezuelan Supreme Court intervened in the opposition primaries. Although the US government has not yet responded to the events in Caracas, it seems likely that Venezuelan oil exports will not be released for the time being.
The diesel price also fell slightly this week. On Friday, October 27, diesel was traded for €139,49 per 100 liters. On Tuesday, October, the price fell to the lowest point of the week, at €137,06. On Wednesday, November 1, the price for large batches of diesel was €137,50.