Last Week
Last week saw Brent Crude Oil prices continue its rally upward surging to $93 per barrel on Wednesday, along with West Texas Intermediary trading at $89.73 up 30% in the last three months. The move higher is currently being sustained due to OPEC+ production cuts, which has allowed for global Crude inventories to now hit their lowest levels since 2017, with figures declining by 17.3 mb in June 2023, yet, coinciding demand for oil is now reaching a record high.
As US oil Inventory figures were published on Wednesday, the markets were inconveniently presented with a weaker USD, which allowed for the price rise to reach the highest levels consumers have seen in 11 months.
With this increase, fears grow ever stronger that if this trend continues, it may spark a harrowing reality of the price for Brent Crude surpassing $100 per barrel, for the first time since Russia’s Invasion of Ukraine. This move higher, along with the looming presidential elections may present room for continued instability in the markets for mid / long term and potentially into 2025, and which may see President Joe Biden’s second term hopes end up in heartbreak.
For a time when the cost of living is at an all-time focus for the majority of consumers, the price for diesel growing ever higher, along with constant recessionary fears, can have a greater impact on consumer confidence and spending in other sectors of the economy, which in turn may adversely affect Prime Minister, Rishi Sunak’s plan to reduce inflation by half over the course of a year, as the current increase in global oil prices is set to increase inflation from 6.8 percent to 7.1 percent.
This Week
Monday morning presented a 0.64% move higher for Oil from close of play on Friday, as the price per barrel for Brent Crude was trading at $94.49 per barrel, once again reinforcing the impact of last weeks spike due to a Weaker USD, working in tandem to global supply cuts of Oil and a fall in global Inventories.
The recent move higher is also a result of China’s latest policy in order to boost economic growth. However, latest industrial output reports coming from China, showing figures from August has expressed a change in the tide for the world’s second largest economy, which data showing a faster than expected growth as of last month.
As the week progresses, European Consumer Price Index data will be released on Tuesday, along with UK consumer Confidence figures later on in the week.