Dhe prices for oil and oil products have risen significantly in April so far – a success of the production cuts surprisingly announced by the Organization of Petroleum Exporting Countries and their allies (OPEC plus) last week. The price of Brent crude oil rose at times to more than $85 a barrel (159 liter barrel) on Tuesday morning before there was some countermovement during the course of the day. At the beginning of the month, the oil price was less than 80 dollars.
Fuel prices in Germany have also increased again. On Easter Monday, a liter of Super E10 cost 1.82 euros, according to figures from the Clever Tanken internet platform, and a liter of diesel cost 1.708 euros. Along the main travel routes on the motorways, prices were sometimes significantly higher. According to figures from the internet platform Heizoel 24, to which 500 oil traders report their prices, heating oil costs an average of EUR 100.11 per 100 liters – at the beginning of the month this price was EUR 96.
Is fuel so expensive or cheap?
The price of crude oil is now roughly where it was before the start of the Ukraine war. However, a year ago, in April 2022, oil was significantly more expensive than it is now, with prices in excess of $100. During the turbulence since the beginning of the war, heating oil had also been considerably more expensive than it is now; in a long-term comparison, it is nevertheless still expensive.
In the case of fuel, it differs depending on the type. Diesel is cheaper now than it has been for most of the war, even than during the rebate phase, but is still more expensive than in previous years. Super E10 was at times cheaper than now during the tank discount; in previous years the prices were considerably lower. However, the current prices are a long way from the price peaks at filling stations from last year, which averaged 2.18 euros per liter for diesel and 2.15 euros per liter for Super E10.
“OPEC has managed to surprise the markets and, with the announced production cut, has lifted the oil price back above 80 dollars,” commented Frank Schallenberger, oil analyst Landesbank Baden-Württemberg (LBBW). Russia has announced that it will initially extend the production cut of 0.5 million barrels per day announced for March until the end of June. According to Russian information, the production cut in March was as much as 0.7 million barrels a day, as has now been reported.
The Swiss bank UBS writes in a study published on Tuesday: “The voluntary production cuts by some OPEC Plus members are likely to further narrow the oil market from May and support oil prices.” UBS expects the oil price to rise in the coming quarters around $100 a barrel. Several banks have slightly raised their oil forecasts in response to the announcement of a production cut last week. Investment bank Goldman Sachs now expects an oil price of $95 by the end of the year and $100 in April 2024.
Are US frackers producing more oil now?
One could imagine America’s fracking industry now using higher oil prices to produce more oil, which could then have a dampening effect on the price. However, the oil experts believe that not too much can be expected so quickly. “US oil production had already shown a meager plus of 0.3 million barrels per day in 2022,” says oil analyst Schallenberger. After the number of active wells in the United States has been declining for around four months, no major jumps in US oil production can be expected for the current year either.
“All that’s clear at this point is that OPEC plus has no appetite for Brent prices below $80 a barrel,” writes Craig Erlam, an analyst at trading house Oanda. “That could pose a challenge to any future push below that mark, as the group has now shown not only that it will cut production – but that it will do so without warning.” On the supply side, the key players switched to OPEC , Russia and the USA tend to take a step back, said Schallenberger. As a result, the oil price will probably remain at a relatively high level for a while, despite the currently rather gloomy economic prospects.