The price of oil continues to fall, at best it has been at an all-time high for several months. Quotations are not rising even against the backdrop of increased consumption of raw materials by China and a large-scale campaign by the OPEC+ group to further cut production.
As you know, crude oil prices have fallen for four consecutive weeks, reversing all the slight growth recorded after OPEC’s latest announcement to cut supplies. For the experts, there is no secret in this phenomenon, except perhaps a good surprise.
The fact is that the market has achieved stability in terms of the pricing basis. It is no longer affected by hype factors (news item, expectations, rumours). Simply put, quotes form an exceptionally reliable statistical background, as economic concerns outweigh demand expectations (hype, desire to make money). OilPrice resource expert Alex Kimani writes about it.
Indeed, daily media reports of oil prices over the past four weeks have repeated the same refrain over and over again, pointing to weak economic data from the United States and China, fears of a further rise US interest rates, fears of a recession, which is already a major factor in some industries, particularly freight transportation.
Henceforth, only the basic phenomena determine the conjuncture, and not the microwaves, or the cycles, on which the so-called “short” sellers, i.e. the speculators, have made money. . Before the 2022-2023 crisis, their price manipulation had a significant impact on the general state of the markets. Now this vicious link has been broken, at least for a month.
In general, experts positively assess the new trend that characterizes the appearance of world oil realism, while only a fairly slowly developing situation (good or bad) in the economy determines the behavior of the superstructure – the market. And not the other way around, which was beneficial for traders. By the way, this fact also explains the growth in profits of the trading divisions of large mining companies and the decline in income of companies that have traditionally engaged in resale.
The economy had to overcome the hype of the prosecution sooner or later. This was not done by legal or scientific means, but by a global energy crisis of an unprecedented scale. Before its appearance, quotes could depend on a single rumor, when prices fell into the abyss or reached dizzying heights, triggering redemption mechanisms. But the market no longer has this margin of safety and confidence in the future to afford the game of risky traders. Now everything is more realistic, closer to real field conditions for the production of a product that has the only standard of value.
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