Despite the unstable market conditions, Brent crude oil remained in the range
of US$70 to US$75 in the last week of September 13-20. Maintaining this
price over the past week indicates that the global economy has improved. On the other hand, the number of corona cases worldwide seems to be stabilizing,
while the vaccination rate is increasing. Based on the above situation,
the conditions for the rise and fall of oil prices are now announced as follows.
After Hurricane Ida in the Gulf of Mexico and the United States withdrew
59% of oil production from the region, as well as the full approval of
Pfizer vaccines and the rise in hopes for global corona control, oil prices
rose by 11%. In the middle of the second week of September, US crude
oil inventories fell by nearly 6.5 million barrels, driving crude oil prices higher. In addition, the amount of refined feed in the United States
increased by 85,000 barrels, driving up oil prices.
To be more specific, the berthing of the Libyan oil terminal and the protests
of Tobruk Port graduates caused delays in oil supply and increased oil prices. On September 7, China Customs reported that with the purchase of imported
crude oil by refineries, China’s daily crude oil imports increased by
8% compared with July.
It’s also worth noting that the supply of crude oil to the United States
was interrupted after Hurricane Ida, which delayed the transportation
of crude oil to Asia and caused the price of sour crude oil to rise.
As you might know, oil is a commodity, so it tends to be more volatile
than more stable investments such as stocks and bonds. There are
multiple effects on oil prices, and we will outline some of them below. Oil prices are affected by many factors, most notably the mining decisions made
by producers such as the Organization of the Petroleum Exporting
Countries (OPEC), independent oil companies such as Russia, and private
oil companies such as ExxonMobil. Like any product, the law of supply and demand affects prices.
Natural disasters that may disrupt the production of oil-producing countries
and political turmoil will affect the formation of prices. In addition to
storage capacity, production costs will also affect prices. Although the impact
of interest rate trends is small, it also affects commodity prices. Moreover, the outbreak of the Corona Delta variant reduced Saudi Arabia’s demand for
crude oil and increased pressure on the world market. The virus has also
slowed economic growth, demand and job creation in the United States.
After all these demand drops, the price of oil has fallen. Saudi Arabia also
lowered the price of crude oil for its Asian customers by $1 per barrel,
while prices in Northwestern Europe and the United States remained unchanged.
This article was prepared by Shirin Yosefi, the Content specialist and market analyst of Infinity Galaxy