Oil lost a lot of ground last week. The Brent benchmark fell to its lowest point since mid-December. The lack of (expected) demand is not doing the oil price any good. For example, new figures show that both Chinese and American factories are not yet running at full capacity. That currently overshadows possible price-raising factors.
The Chinese manufacturing purchasing managers' index (PMI) released on Saturday by the Chinese statistical agency showed that production has fallen again. The index fell from 49.4 points in July to 49.1 in August, a six-month low. The services sector grew slightly (and above expectations), from an eight-month low of 50.2 in July to 50.3 points in August.
The continued faltering of the Chinese economy is putting pressure on the oil price, but the American PMI published on Tuesday 3 September also came in below 50, which means a contraction. At 47.2, factory activity was better than a month ago, when the figure was 46.8, but more was expected (47.5).
Brent crude was at $4 a barrel at the time of writing (late afternoon on September 73,28). That is down 8,3% from $79,94 on Thursday, August 29. Oil has not been this low since mid-December 2023.
UN mediates in Libya
Last week, the oil price rose, partly driven by the closure of oil fields in Libya. As a result, production is at a low level. Almost 70% less oil is being produced. In the capital Tripoli, the UN is currently attempting to mediate the battle for the central bank and the oil fields in the North African country.
The two rival power parties are now said to be close to an agreement to jointly appoint a central bank governor and thus gain shared control over the oil fields, according to news agency Reuters. The country is highly dependent on oil revenues.
What will OPEC+ do?
This week, the influence of the tensions in the Middle East on the oil price remained limited, although that could change again. What is keeping the market very busy is what OPEC+ will do in October. Will the countries of the oil cartel increase the production quotas or will they postpone the decision for a while?
Diesel price
Diesel is falling in price, from almost €122 per 100 litres last week to around €120.