Oil prices rose early this week, but the increase was quickly reversed later in the week. Mixed signals from the International Energy Agency led to a rise in the oil market that only lasted a short time. Due to a larger increase in American oil inventories than expected, the Brent price fell again.
The price of oil seemed to rise this week, but the price has now fallen almost as much. On Thursday, November 9, a barrel of Brent oil traded for $80,01. On Monday, November 13, the oil price reached its highest point of the week. On that day, oil traded at €82,52. The rest of the week saw the Brent benchmark decline.
The higher prices on the oil market were the result of greater demand. Despite the sluggish economy in the United States and China, the International Energy Agency (IEA) has revised the 2024 oil demand upwards by one million barrels per day. Higher demand will see prices rise to $93 per barrel, about $9 above the estimated 2023 average oil price, the Energy Agency estimates. It is striking that consumption by American consumers is actually decreasing. For example, the agency expects gasoline consumption in the United States to reach a two-decade low as people drive less to work. In addition, the efficiency of cars is increasing and more electric vehicles are being driven. In addition, people will leave their cars where possible because of inflation.
Tightness
In addition to the increased demand, the IEA foresees several risks to supply. The increasing instability of the Middle East in particular is putting pressure on supply. The agency expects supply from OPEC+ countries to remain low. Nevertheless, the IEA also says that the oil market is not as tight as the organization first expected. Production growth in the US and Brazil is faster than the IEA previously expected. This compensates for the lower production of the OPEC countries. Despite OPEC+'s production drop of 1,5 million barrels, international supply has fallen by only 400.000 barrels per day.
Partly due to this nuance, a greater inventory build-up in the United States than the market expected led to a lower oil price. Analyst estimates of the build-up of oil inventories ranged from 800.000 to 1,8 million barrels. In practice, however, inventories increased by 3,6 million barrels, according to data from the American Energy Agency (EIA). It is particularly remarkable that stocks are increasing further after last week's enormous increase of no less than 12 million barrels.
The diesel price once again appears to lag the oil market by a few days. On Friday, November 10, large lots were traded for €130,56 per 100 liters. The diesel price then rose to €133,31 on Tuesday, November 14, before falling again.