Negative sentiment predominates on the oil market. Concerns about both the Chinese and American economies are receiving a lot of attention. In addition, optimism about the negotiations on the war in Gaza put pressure on oil prices. Although Hamas now seems less enthusiastic.
The price of oil has fallen significantly this week. On Thursday, July 18, the price of Brent oil was $85,11 per barrel. On Thursday, July 25, the price of oil was still $81,06. This is a decrease of 4,8%.
After a period of relative optimism about the global economy, momentum in the oil market appears to have reversed. In the United States, the shares of tech companies have taken a big step down. In total, the Nasdaq fell by more than 2,3%, the largest single-day decline since December 2022. Two companies drove this decline: Tesla and Google's parent company, Alphabet.
Tesla shares fell 12,3% after the company announced its lowest profit in five years. The company has thus achieved its worst result since September 2020. Alphabet's share fell by 5%. It is remarkable that the company has achieved its turnover targets. However, shareholders pay little attention to this, as advertising revenues that are crucial to the company are declining and the company has announced major investments. Analysts say it's not just the significant declines themselves that are cause for concern about the broader economy. Tesla and Alphabet are so big that the significant decline in their shares can affect the prices of other companies. What also doesn't help is that the longest period without declines of more than 2% since 2007 has come to an end.
Chinese numbers echo
Due to the weak results in the United States, there is now more emphasis on last week's weak Chinese economic results. Last week, disappointing Chinese GDP growth caused a slight decline in the oil market. Data from the Chinese statistics agency showed that GDP had increased by 'only' 4,7%. This seems like a lot, but it is on the weak side for the still rapidly developing Chinese economy. The Chinese government has set a target of 5% economic growth by 2024. With the current result, the Asian country is behind the target. Although the oil price reacted to the news, the decline was relatively limited. Now that it appears that the American economy is also struggling more than expected, the Chinese results nevertheless caused extra pressure.
War Gaza
Finally, energetic negotiations in the war between Israel and Hamas put pressure on the oil price. Israeli Prime Minister Benjamin Netanyahu indicated that a deal for the ceasefire is taking shape. Egypt Qatar and the United States are putting significant pressure on the Jewish state to reach an agreement with the terrorist organization. In any case, Hamas, led by China, has already concluded a deal with the daily administrators in the Gaza Strip, Fatah. The two parties, who until recently had little interest in cooperation, have agreed to form a new board together. This at least puts an option on the table regarding the question of who could take over power after an Israeli departure. Yet the question remains how well the negotiations are really going. For example, on Thursday, July 25, Hamas indicated in the press that Netanyahu is not taking a serious position in the negotiations. The question is therefore whether the optimistic mood surrounding a ceasefire will change.
The price of diesel has also taken a step down. On Thursday, July 18, 100 liters of diesel traded for €129,08. On Wednesday, July 24, the price dropped to €126,66.