After last week's low, the oil price has almost completely recovered within a week. The value increased as the US Department of Energy expects demand to rise in the United States. Since Thursday, however, fluctuations in exchange rates have reversed the trend.
The oil price has risen by more than 3% this week. On Thursday, June 6, oil traded at €79,87 per barrel. On Thursday, June 13, oil fell to €82,38 per barrel.
If we look at last week's low point, the increase is even greater. On Tuesday, June 4, oil was still trading at €77,52 per barrel. Compared to that point, the price has risen by more than 13% on Thursday, June 6. This is an atypically strong increase for the oil market. Last week the oil price fell after it emerged that OPEC had opened the door to slightly higher production from the fourth quarter. The reason the market reacted so strongly was that the US oil market was already out of balance. In that country, supply exceeded demand.
Since the low point, confidence in the oil market has recovered considerably. This is mainly because the market expects the demand for oil to increase sharply soon. In the summer the number of flights increases, causing the demand for kerosene to rise sharply. Demand is increasing sharply, especially in the United States, causing traders to believe that the market is returning to balance.
The US Department of Energy has also revised upward its forecast for oil market growth. Demand will increase by about 1,1 million barrels per day at the end of the year compared to 2023. This is an increase of 200.000 barrels per day compared to the previous forecast. According to the ministry, demand for oil will therefore exceed supply by about 2024 barrels per day at the end of 800.000.
Exchange rates
The increase in oil prices was interrupted on Thursday. An important reason for this is a change in exchange rates. The value of the euro fell this week after French President Emanuel Macron announced elections following a major victory over populist politician Marine Le Pen. Meanwhile, the dollar actually became more expensive than other currencies. Because oil is traded in dollars, the rising value of the U.S. dollar makes oil more expensive for markets outside the United States. This has negative consequences for demand.
In addition, it did not help that oil reserves in the United States have increased again. A total of 3,73 million additional barrels were stored. The market expected reserves to decline by 1,55 million barrels after the increases in recent weeks. This has a significant impact on the market, as the US oil sector will have difficulty keeping reserves in balance throughout 2024.
The price of diesel has also risen sharply. On Thursday, June 6, oil traded for €124,34 per 100 liters. On Wednesday, June 12, the price had risen to €128,52.