The oil price fell at the end of last week, reaching approximately the same point. The lack of lower US interest rates initially put pressure on oil prices. However, higher expectations from major American investment banks and the lack of a ceasefire in Gaza caused the oil price to bounce back.
The price of oil is back to square one after a short-lived decline. On Thursday, February 22, Brent crude was trading at $83,67. Until Friday, February 23, the oil price fell to $81,62. Afterwards, the oil price rose again to approximately the same level.
At the end of last week, the oil price was under pressure and this has to do with expectations regarding interest rate policy in the United States. The US central bank (Fed) announced last week that interest rates will probably not be lowered for another two months. According to Fed board member Christopher Waller, interest rates must remain high for the time being to prevent a new wave of inflation. US interest rates are closely monitored on the oil market. Since the war in Ukraine, despite relatively strong economic performance, US oil demand has been on the weak side. The market's disdain is that lower interest rates will boost the US economy, causing oil demand to increase.
American question
On the other hand, several banks gave positive signals about the oil market. Investment bank JP Morgen notes that global oil demand increased by 1,7 million barrels per day in February. Analysts at the bank note that an increase in air traffic in Europe and Asia will lead to higher oil consumption. Investment bank Goldman Sachs also supports the oil price. The bank revised its forecast for the summer peak from $85 to $87. The main argument for this is the situation in the Red Sea. Because many ships choose to sail via the Cape of Good Hope, the investment bank anticipates higher demand. In addition, the bank expects the price to remain between $70 and $90 for the time being.
Geopolitical tensions in the Middle East will cause the price to move higher rather than lower in that range, the bank believes. That became clear again this week. On Friday, Israeli Prime Minister Benjamin Netanyahu decided to send mediators to Paris for negotiations on a possible ceasefire. There was hope for peace for a while after Biden indicated that the Israeli army would not undertake any activities during Ramadan. This would give Hamas the opportunity to release the hostages. Soon, one of Hamas's leaders, Ahmed Abdel Hadi, told the Lebanese news channel Al Mayadeen that Israel is not meeting the terror organization's demands.
The diesel price remained fairly stable this week. On Thursday, February 22, diesel traded for €133,46 per 100 liters. This was the highest diesel price of the week. On Tuesday, February 26, the price of diesel dropped to the last point of the week: €132,31 per 100 liters.