Sentiment on the oil market is significantly more favourable than last week. Positive economic indicators from the United States and a growth in imports from India provided a more favourable perspective this week. However, the Brent benchmark remains around the same level again.
The price of oil has remained fairly stable over the past few days. On Tuesday, December 17, Brent crude was trading at $73,19 per barrel. On Tuesday, December 24, the oil price was slightly higher, trading at $73,33 per barrel.
The oil market is all in all reasonably balanced, but the undertone on the market is clearly searching. The long-term sentiment is quite negative. In previous weeks, the sentiment on the oil market was bearish. That week, the German and Chinese economic figures were released. And they were not nice. The ailing Chinese economy in particular continues to depress demand. The Chinese economy did grow, but retail sales were disappointing. Nevertheless, the oil price held up during this period. The strong dollar in anticipation of a possible interest rate cut in particular kept the oil price at a level.
This week, sentiment seems to be turning slightly positive. The United States has released new economic results, which again turned out to be slightly better than expected. In the third quarter, the American economy grew by no less than 3,1%. The effects on the oil market are clear. According to the American Oil Institute (API), inventories have decreased by two million barrels. This is an indication that demand is higher than the market had initially expected.
Indian economy demands more oil
In addition, a strong Indian economy is driving demand for oil. Data from the country shows that Indian oil demand rose by 2,6% in November compared to the same month a year earlier. Total imports amounted to 19,07 million tonnes. The stronger demand is partly the result of good economic results. The Indian manufacturing industry is doing well, which is driving demand for transportation. On top of that, the population of India is traveling more and more, which is also driving demand for kerosene significantly.
All in all, the slight negativity is turning into a neutral to fairly positive sentiment. With economic indicators from several major trading blocs balancing each other out, traders expect oil prices to remain around the same level for the time being.
The diesel market is also experiencing stagnation. On Tuesday 17 December, diesel was traded at €131,23 per 100 litres. On Tuesday 24 December, the price had fallen to the level of €130,83.