The oil market is currently in calm waters. According to the International Energy Agency (IEA), a large supply currently provides peace of mind. Although a sharp drop in American reserves led to a significant increase on Wednesday, March 13.
The oil market was quite stable for most of the week, until Wednesday March 13 when the price rose by more than 2%. On Thursday, March 7, oil traded at $82,96 per barrel. The price then dropped until Wednesday, March 10, when oil dropped to $81,92. On Wednesday, March 13, oil hit its all-time high of $83,88.
The stability on the market is mainly due to supply, as shown in the latest report from the International Energy Agency. The agency expects that this will not change the situation for the time being. Despite OPEC's lower targets, the IEA expects production to grow to a record level of 2024 million barrels per day in 103,8. The agency notes that the market is currently on the space side. Supply is particularly strong in the American markets, the IEA notes.
The growth is mainly attributable to growth in production in the United States, Brazil and Guyana. In the meantime, the OPEC countries are keeping production low. On top of that, Russia and Saudi Arabia maintain a reduced target of 2,3 million barrels per day. The market expects that these countries will maintain the lower targets. However, cooperation within the cartel does not appear to be watertight. The production of the second largest OPEC country Iraq is still above the agreed targets.
Lower demand
On top of that, demand is starting to grow less quickly. In 2023, global oil demand increased by 2,3 million barrels per day. That was well below the expectations of the International Energy Agency, but according to the IEA, demand will increase less strongly in 2024. The organization tells Reuters that demand is increasing by 1,2 million to 1,3 million barrels per day.
Analysts mainly attribute the increase on Thursday, March 13 to new data from the American Petroleum Institute (API). The institute announced that US industrial reserves fell by 5,5 million barrels this week. This is an above-average decrease. The impact is particularly significant, as reserves fell for the first time in seven weeks. Because the decline was difficult to predict, the impact of the decline appears to be significant. The market is currently waiting to see whether the US Energy Agency confirms the API's findings.
The price of diesel has fallen slightly this week. On Thursday, March 7, the price for 100 liters was €131,13. On Friday, March 9, the diesel price rose to €131,95. The price of diesel then fell again, reaching a low of €11 on Tuesday, March 130,35.