Last September oil prices peaked for 2023 at $93 per barrel, but since then they have fallen significantly. This is despite the current conflict in the Middle East, which usually indicates a price increase. Chris Leyland, Director of Investment Strategy, looks at the current state of the oil market as a whole, focusing on the more subtle factors that are affecting these figures.
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Morning everybody and welcome to today’s Morning Market so today I’m going to focus in on the oil price but most importantly what does this mean for your money okay so let’s look at what’s been happening recently in respect of the oil price and what we saw is the oil price
Peaked out last year inid September so it peaked out at just over $93 per barrel and then if we look at where we are right now we’re at just over $73 per barrel overall so what’s led to those falls in the oil price so when you see a conflict come through in the
Middle East quite often you would expect that you would see a higher level of oil prices come through but you haven’t seen that overall so what are the key factors in play so when oil was trending above $90 per barrel what we saw is more countries start to look to bring
Production online so particularly the US started to produce more oil this meant that it was more difficult for OPEC plus so op plus is the main oil producing Nations to control prices by cutting Supply secondly what we also saw is that there was a reduction in demand from
China so China is the largest consumer of oil within the world and then finally what you also seen is US gas prices are falling so what you can see is a lot of people have the choice between gas or oil when Heating and obviously if gas prices are falling then that means that
That also puts pressure on the oil price as well what have we actually seen in recent days so that’s what we saw since September to now but actually what have we seen since the start of the year and you’ve seen quite a bit of vola ility in
The oil price come through you know if we look uh yesterday Brent was up nearly 2% on the day and that built on what was a strong trading session the previous day now What’s led to that is that the Shara oil field in Libya actually stopped producing oil and that’s because
Of the political protests that are taking place there so that took out around about 300,000 barrels per day of production I guess you know what’s our take on this you know we’ve discussed a lot around a higher oil price over the last couple of years about how that fed
Into the inflation calculation overall and I guess you know we talked a little bit earlier when I was talking about how you would expect a conflict in the Middle East to lead to higher oil prices but what hopefully I’ve explained to you is that that’s just one single factor
And there are other factors that are driving the oil price overall for us we don’t expect the oil price to significantly increase higher from where we are right now however as always we will monitor events what else has been happening in asset moves over the last
Day or so um pretty mixed day in equity markets yesterday the US was the only main Market to finish in positive territory and that was really a rally in the technology sector that boy prices overall later this week uh you’ve got quite a few big companies reporting
Particularly the US Banks so we’ve got JP Morgan we’ve got Wells Fargo and we’ve got Bank of America reporting this week uh in currency probably the move there is a little bit more strength coming through in the dollar after a lot of weakness that we saw at the end of
Last year and all eyes are on the US inflation data that comes out tomorrow that’s everything for me uh hope you enjoyed today’s morning markets I really look forward to speaking to you soon thank you