The oil price was under considerable pressure this week. Due to a reluctant processing sector, the supply of crude oil in the United States is quite ample. In addition, discussions between Israel and Hamas ensure calm on the oil market.
The price of oil has taken a significant step downward. On Friday, May 26, the oil price reached its highest point of the week, at $89,50 per barrel. The price then dropped until Wednesday, May 1. That day, the oil price reached €83,44.
This means that the oil price loses 5% and reaches the lowest level in seven weeks. Overproduction in the United States remains an important factor putting pressure on oil prices. Last week, reserves increased by 7,3 million barrels, the US Energy Agency (EIA) announced. This means that reserves reach the highest level since June 2023. This increase was completely unexpected. A Reuters poll showed that experts expected oil inventories to decline by 2,3 million. In total, the industry has stockpiled 461 million barrels. The American media reports that production has fallen sharply.
Properties
In total, 87,5% of all oil is processed directly into fuel. In the same period last year, that percentage was 90,7%. This is partly due to an overestimation of demand, but the oil supply in particular has grown significantly. EIA data shows that crude oil production rose to 13,15 million barrels per day in February. The month before, the country produced 12,58 million barrels per day. This is the strongest increase in three and a half years.
Meanwhile, gasoline production also rose sharply, but much less strongly than oil production. In February, 9,4 million barrels were processed, compared to 9,1 million barrels the week before. Although production remains on the low side. While crude oil reserves are reasonably full, distillates reserves are declining by 1,6 million barrels per day. American trade media report that the fear of overproduction hangs over the American market. This is partly because too much was produced last year due to the fear of undersupply.
Peace talks
Meanwhile, geopolitical tensions are reducing upside momentum. On the one hand, Israeli Prime Minister Benjamin Netanyahu insists that a Rafah raid is inevitable because it is the only way Hamas can be defeated. On the other hand, Israel has sent a delegation to Egypt for ceasefire negotiations. International reports indicate that Hamas is considering a proposal from Israel.
For the time being, the price of diesel is not falling along with the oil price. On Thursday, April 25, diesel traded for €129,64 per 100 liters. The price then dropped slightly to €128,93.