The oil market is experiencing prolonged instability. Indeed, rises and falls in the price of black gold follow one another. Impacted by geopolitical tensions in Ukraine, prices experienced several consecutive sessions of increases. However, these prices are overtaken by economic realities in relation to the decline in demand.
This Monday, November 25, a barrel of Brent from the North Sea is listed at $74.44. As for its American equivalent, West Texas Intermediate (WTI), it is sold at $70.03 per barrel. Oil is thus going through a phase of instability. It is experiencing a slight decline compared to last week when it gained more than 6%.
It must be said that several factors have contributed to the instability of the oil market in recent days. Indeed, the intensification of the war between Russia and Ukraine caused prices to rebound for a few days. However, economic realities weighed on the decline in prices. Thus, fears of a possible glut in the coming months are preventing prices from rising sharply.
It should also be noted that the global economic recovery is proving very slow. For the coming days “the price is also expected to remain in this trading range ($70-75 per barrel),” says Barbara Lambrecht, commodities analyst at Commerzbank AG.
The market outlook is therefore not very encouraging for producing countries. As over the past seven days Russia and Ukraine have intensified their attacks on each other, oil prices have soared and the escalating conflict has created a floor for crude.
Oil prices expected to remain in the same range in the coming days
“This raises concerns about a possible disruption of energy supplies from Russia if Ukraine targets refineries or export terminals in Russia, which has happened in the past,” says analyst Carsten Fritsch at Commerzbank. This week, new data caused prices to slow down and even push them back.
The oil market remains cautious in the face of weak demand for crude oil globally. Analysts say traders will focus more on the prospect of an OPEC+ production increase from January, if the conflict in Ukraine does not escalate further. A perspective which will have a great impact on prices which will have to fall further. Note that this organization is expected to hold its ministerial meeting on December 1 to decide whether it should cancel some of its voluntary production reductions from January.
