The second corona wave is slowly penetrating the oil market. This week the oil price has fallen well below the price of $40 a barrel as a result of the virus escalating.
The price of agricultural diesel dropped to over €0,85 (excluding VAT and including members' discount). Since April, the oil price has not fallen so sharply in such a short time. With the exception of 3 weeks ago when the American president was in hospital because of corona.
No large stocks
The sharp fall in the oil price is a direct result of declining demand due to the second corona wave. Increasing production in a number of oil-producing countries in the Middle East also plays a role. This is happening despite agreements that have been made in this regard within OPEC. These production-limiting agreements stabilized the oil price worldwide last summer. It was planned to further relax the measures at the start of 2021, but this intention is coming under pressure due to the second wave.
Unlike the spring of 2020, the second wave of corona has not taken over the oil market now. There are currently no large stocks for which a market and storage capacity are lacking. Moreover, the approaching winter will create additional demand for energy. Mainly in the form of gas, but also in oil. Compared to September, almost a quarter more gas was consumed in October. It is therefore not obvious that energy prices will again fall through the bottom as they did last spring.
Little solar energy
This week it once again became clear that additional wind energy causes fewer fluctuations in the price of renewable energy than solar energy. The sustained westerly flow ensures a fairly constant production of high-level wind energy. That production is much greater than the amount of electricity generated by solar panels at this time of year. This month the sun was also exceptionally rare. Since April, partly thanks to the abundant sunshine, solar panels have produced an extra amount of sustainable electricity. Now this picture is completely reversed. Despite the autumn weather, the production figures for windmills for February have not yet been achieved. Then the average wind speed was even higher than last month.
American elections
The price of CO2 allowances has risen slightly again this week. The rights were the first component that had decreased in value as a result of the second corona wave. Like no other component, the CO2 price depends on political developments. If it turns out in the coming week that Democrat Joe Biden has won the US election, it will undoubtedly cause a price hike. With Biden in power, world trade policy is normalizing and America is once again participating in the global agreements for CO2 reduction.
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