The oil price has been somewhat volatile this past week, but the market seems to be adopting a wait-and-see attitude. The factors that are pulling the price - both up and down - have remained more or less the same and the question is which way it will go. The US presidential elections, which will take place in less than two weeks, also play a role in this.
The oil price is currently at €24 at the time of writing (October 76,49 early afternoon). That is almost 3% higher than a week ago (October 17).
Last week, the oil price took another (bigger) step down. Apart from disappointing global (read: Chinese) demand for oil (with higher production), this was also because it came out that Israeli President Netanyahu had told Biden that he did not want to attack Iranian oil refineries, but rather military targets.
Meanwhile, the market is still anxiously awaiting what Israel will do in retaliation for Iran’s October 1 attacks, which were in retaliation for the killing of Hezbollah leader Hassan Nasrallah in an attack on Beirut, Lebanon. That Israel is preparing for an attack was confirmed this week by leaked US intelligence reports.
US oil supplies are increasing
Yesterday (Wednesday, October 23), weekly data from the US government agency EIA showed that US oil inventories increased by 5,4 million barrels to 426 million barrels. This has a bearish effect on the oil price, but due to ongoing concerns about geopolitical tensions in the Middle East this remains limited.
It also remains to be seen how the Chinese economy and thus the demand for oil will develop. In addition to a series of stimulus measures, the Chinese state has recently announced that it will issue government bonds to raise money to support the weak economy. For the time being, there is little confidence in the Chinese attempts to pull the ailing economy out of the doldrums. Seeing is believing, is the credo of many analysts.
OPEC last week revised down its global oil demand forecast for 2024 and 2025 for the third straight month. Last month, OPEC+ members agreed to maintain voluntary production cuts of 2,2 million barrels per day through the end of November to support oil prices. If the cuts are not extended, oil prices will be depressed.
Another factor that is causing the market to adopt a somewhat wait-and-see attitude is the US presidential election on November 5. It could make a difference whether Harris or Trump will be in the White House. As for the latter, there are concerns that he will add fuel to the fire as president, worsening international relations and possibly further escalating geopolitical conflicts.
Diesel price
After two weeks at the same level, the diesel price has dropped from €123,25 to €121,79 per 100 liters compared to a week ago.