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Oil price reaches new high for the year

oil barrels

The price of crude oil rose to its highest level this year. At the time of writing, Brent Crude was approaching the $90 per barrel threshold, as traders have become concerned over supply.

The price of crude oil has implications for fuel costs and derived products like hydraulic oil and slideway oil from brands like Castrol and Petronas. Nevertheless, prices are unlikely to return to levels seen just after the Russian invasion of Ukraine, when they went well over $100 per barrel.

Despite production cuts by the OPEC+ group of oil-producing countries, including a further voluntary 1 million barrels per day (bpd) cut by Saudi Arabia, prices have stayed relatively low due to concerns about possible recession, but these fears may have been unfounded. Phil Flynn, an analyst at Price Futures Group, said to Reuters:

“There is a realization the economy is not falling off the map, and signs that demand is near record highs. People have to face the cold, hard reality that supplies are below average.”

Economic data suggests that the world economy may be faring better than expected. The US Energy Information Administration’s survey of commercial oil inventories has revealed a drop in inventory for five out of the last six weeks, indicating that there is robust demand for oil. Manufacturing in the Eurozone also saw its recent downturn easing off, indicating that it may have turned a corner, while an unexpected recovery in Chinese manufacturing offered further evidence for a potential increase in the demand for oil.

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