Analysis Energy
Oil market remains stable with increasing sentiment
The sentiment in the oil market is significantly more favorable than last week. Positive economic indicators from the United States and an increase in imports from India have provided a more favorable outlook this week. However, the Brent benchmark remains around the same level.
The price of oil has remained fairly stable in recent days. On Tuesday, December 17, Brent oil was traded at $73.19 per barrel. On Tuesday, December 24, the oil price edged higher to $73.33 per barrel.
Overall, the oil market is fairly balanced, but the underlying tone in the market is clearly searching. The long-term sentiment is rather negative. In previous weeks, the sentiment in the oil market was bearish. During that week, economic figures from Germany and China were released. They were not favorable, especially with the struggling Chinese economy putting pressure on demand. Although the Chinese economy grew, retail sales were disappointing. However, the oil price held steady during this period, mainly due to the strong dollar in anticipation of a possible interest rate cut.
This week, the sentiment seems to be slightly turning positive. The United States has released new economic results, which turned out to be slightly better than expected. In the third quarter, the American economy grew by a remarkable 3.1%. The effects on the oil market are evident. According to the American Petroleum Institute (API), inventories have decreased by two million barrels. This indicates that demand is higher than initially expected.
Indian economy demands more oil
Additionally, a strong Indian economy is leading to an increased demand for oil. Data from the country shows that Indian oil demand in November increased by 2.6% compared to the same month a year earlier. Total imports amounted to 19.07 million tons. The stronger demand is partly due to good economic performance. The Indian manufacturing industry is doing well, leading to increased transportation demand. Furthermore, Indian residents are traveling more, resulting in a significant increase in kerosene demand.
Overall, the slight negativity is turning into a neutral to fairly positive sentiment. With the economic indicators of various major trading blocs balancing each other out, traders expect the oil price to remain around the same level for the time being.
