Yesterday, the oil price fell hard
The oil price
came under renewed pressure yesterday, reports BDLive
. The “stronger dollar outweighed evidence of lower oil production by OPEC ahead of the producer’s group meeting later” this month.
The fall in the price of crude oil took it “to yet another multi-year low and the lowest level of its most recent breakdown,” says Business Insider
With the stronger dollar appearing to be the main driving force behind the lower oil price, what lies in store?
A senior currency strategist at Commerzbank AG, Lutz Karpowitz, told Bloomberg
that “all arguments are in favour of the dollar”. He says “underlying dollar strength” is justified.
Just back in June, Brent crude oil was trading at $115 a barrel, says BDLive
. But that was before “abundant supply has overwhelmed demand”.
The market isn’t expecting a recovery in the oil price any time soon
Looking to the futures prices for Brent crude, December contracts are priced at $85.46, adds BDLive
This shows that, as it stands, the market isn’t expecting any significant recovery in the oil price, probably on the basis of the dollar retaining its strength.
The good news for South Africans is that if the oil price does remain suppressed, and the rand plays along too, more fuel cuts could be on the cards for December.
Tomorrow, prices at the pumps will fall significantly
as the weaker oil price helped offset import costs. Petrol will drop 45c a litre. And diesel will drop between 60c and 61c a litre.
At time of writing, Brent crude was trading at $84.30 a barrel.
Time will tell how the oil price performs.
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