Analyst Leon Li estimates that next year the price of crude oil may drop to 60 dollars per barrel.
Long the price of crude oil, which had been falling, turned to a slight rise on Friday for the second time this year.
The price of the North Sea’s Brent reference quality had risen by 0.2 percent to 83.66 dollars per barrel on Friday morning. A barrel corresponds to 159 liters.
The Brent reference quality has declined by more than $55 per barrel from the price peak of $139.13 in the first half of March. The percentage drop is about 40 percent.
Oil the price is particularly sensitive to economic cycles. The stormy year has been marked especially by the effects of the war in Ukraine, when the price of crude oil rose as the geopolitical situation tightened.
The price drop has also been influenced by the strengthening of the dollar and the prospect of declining demand in China, the world’s largest oil importing country.
From February 2023, more than 40 percent of Russia’s oil exports will be subject to sanctions. Russia has announced that it will ban oil sales from February to countries and companies that have introduced an oil price ceiling. Because of the sanctions, Russia has to divert more and more crude oil and refined products to the Asian market instead of Europe.
of the United States in the most important oil-producing states, production growth has slowed despite the increase in prices. According to a recent survey by the Dallas Federal Reserve Bank, inflation, supply chain disruptions and economic uncertainty have caused manufacturing facilities to revise their expectations.
“The past year has been exceptional in the commodity market. Supply risks have further increased market volatility and increased prices,” an analyst at the Dutch financial company ING Eva Manthey told Reuters.
Manthey expects “a new year of uncertainty” from next year, and at least the market fluctuations will not stop, he estimates.
CMC Markets company analyst Leon Li told Reuters that although the increase in holiday tourism at the end of the year and Russian oil sanctions will support the rise in oil prices, consumption will decrease next year, and a sharp drop in crude oil prices is possible.
“The unemployment rate is expected to rise worldwide next year, and that will limit the demand for energy. I think the price of oil can go down to $60 [barrelilta] next year,” Li said.
The price of crude oil plunged into a rapid decline in the second half of this year, as central banks raised interest rates to fight inflation. That in turn strengthened the US dollar.
Also China’s abandonment of the zero policy aimed at suppressing the coronavirus has affected the demand for oil. China is expected to continue its slow recovery next year, but the sharply increasing number of corona infections and worries about a global recession have reduced demand for commodities.
“When the travel restrictions were eased, the demand for oil was supposed to increase. However, the sharp increase in the number of Covid cases in China has raised serious concerns about a possible global epidemic”, director of consulting company JTD Energy Services John Driscoll told Reuters.
According to estimates, around 9,000 Chinese people die from the coronavirus disease every day.
Several countries, such as the United States, South Korea and Japan, have begun to require negative corona test results from tourists arriving from China.
Correction 30.12 at 20.53: The Brent reference quality had fallen by around 40 percent per barrel, not 60 percent.