The oil price has recently been very volatile again. The price of Brent Crude, the leading oil grade, recently fell below USD 73 per barrel (159 litres), only to recover significantly. Before the weekend, it was traded at more than 76 dollars. And it should not be forgotten that the oil price was still at almost 100 dollars at the end of September. This unusually high volatility reflects the current uncertainty among players on the oil futures market.

The market is currently orientated almost exclusively towards the US Federal Reserve. When market participants became convinced that the key interest rate in the US could remain at a high level for longer than previously thought, the oil price fell to below USD 73. When Fed Chairman Powell then made it clear that there would probably be no more interest rate hikes, a significant recovery set in that lifted the oil price back above the USD 76 mark.

This clearly shows that there is once again a very noticeable discrepancy on the oil market between what is currently happening on the futures markets and the physical oil market, which is far less dependent on the US Federal Reserve than the current price movements imply. This is due, for example, to the fact that a large proportion of demand comes from China and other regions of the world and that there is a long-time lag before central bank decisions reach the real economy and thus actually influence oil consumption.

A market situation like the current one has not lasted long in the past and it is not expected to be the case this time either. It can, therefore, be assumed that the oil price will return to the price range of between USD 80 and USD 100 per barrel of Brent in the new year, which is the target set by the producer cartel Opec plus. An oil price below 80 dollars is unacceptable for the primary producers because Saudi Arabia, for example, must endeavour to balance its national budget. The futures markets will not be able to ignore these realities long-term.