The price of crude oil in the global market continues to rise as demand and forecasts for it increase in both Asia and America. At the same time, some analytical agencies predict that the average price of Brent oil this year will be lower than last year, writes Indrek Sassi, head of motor fuel pricing at Circle K.
The main reasons for the rise in crude oil prices, which reached the highest level in the last three weeks, are associated with a decrease in production in OPEC countries and expectations of increased demand in China, Sassi noted:
“Saudi Arabia raised prices for Asian customers more significantly than analysts expected. If an increase of 10 cents per barrel was expected, the actual increase was 60 cents per barrel. This indicates that oil demand in China has increased. In addition, the price level is affected by the new support package presented by the Chinese government, which gives oil market participants additional hope for increased purchase volumes from China.”
The rise in crude oil prices on the world market was also due to a decrease in production in Russia. The OPEC+ target for Russia in December was 9.949 million barrels of oil per day, but actual production was lower than the target, amounting to 8.971 million barrels. This decline came after two months of production growth in Russia.
“The global price of crude oil is also affected by the fact that US inventories have fallen more than expected. Recent US economic indicators such as job openings and layoff rates have instilled confidence in the positive outlook for the US economy, pushing the price even higher,” Sassi added.
However, he noted that the further dynamics of crude oil prices remains uncertain, and it is difficult to say how long the price rise may last. Everything will depend on how much oil will hit the market in the near future and what the real demand in the world will be.
“Cold weather in the US and Europe is currently pushing crude oil prices higher, but many analysts such as Fitch are forecasting that the long-term average Brent price this year will be US$76 per barrel, down last year’s average of $80,” Sassi said.
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Source: www.dv.ee
