The price of Brent oil falls yesterday to its lowest level since mid-June, Commerzbank’s commodity strategist Carsten Fritsch notes.

Demand concerns move the price lower

“The price of Brent oil fell yesterday to its lowest level since mid-June, but it had already fallen by around 3% on Friday, with most of the price decline occurring in the late afternoon and evening. There is no oil market-specific trigger for the current price weakness. The headwind is therefore very likely to come from the generally negative market sentiment towards cyclical commodities.”

“Oil prices were initially able to withstand this, but this changed abruptly on Friday. Demand concerns have evidently gained the upper hand as a result. The voluntary production cuts by OPEC+ are ensuring that the oil market is undersupplied in the current quarter. This is also shown by the forward curve.”

“The significant decline in US crude oil inventories over the last three weeks also suggests that supply is rather tight. Supply risks do not appear to be playing a role on the market at present. Given the current dominance of demand concerns, oil prices may initially find it difficult to make up lost ground. However, we expect oil prices to rise again in the coming weeks due to the factors mentioned above.”