The price of Brent crude oil has risen above the $80 mark per barrel in mid-January, having increased for four consecutive weeks.
Since the beginning of the year, prices have already increased by more than 7%. Over the last 30 days, they have fluctuated from $74 to over $80 (an 8.6% increase). Recent forecasts by Goldman Sachs did not expect prices to surpass the $78 mark in the first half of the year, but this has already occurred.
“This stock market rise is related to how the demand for crude oil is expected to look in the new year,” says Michał Stajniak, Deputy Director of the Analysis Department at XTB, in a conversation with MarketNews24. “Soon, it will be important what Donald Trump, as the incumbent president, will offer to oil extraction companies, with the average marginal cost setting the profitability of new oil drills at $60-65.”
Thus, increasing drilling is theoretically profitable, and it is worth remembering that OPEC+ in December 2024 reduced production and set a production target for the next three months. In the first quarter of this year, we will have an oil deficit worldwide, and US inventories are very low compared to the last five years.
The situation is therefore conducive to rising oil prices, and much will depend on the condition of the Chinese economy, a major importer.
There are many factors influencing oil prices, and new ones are emerging. The strengthening of the US dollar casts a shadow over the mood on Wall Street and puts pressure on both the markets and the currencies of emerging economies. Hopes for interest rate cuts across the ocean in 2025 have almost entirely evaporated. This is partly due to a surprisingly strong NFP report from the US labor market, strong growth in service prices in last week’s US ISM report, and oil prices, which are rising for the fourth consecutive week, above $80 per barrel.
Investors fear that consistently strong data from the US (especially from the labor market), along with Donald Trump proclaiming protectionist tendencies and high tariffs, and rising oil prices mean that inflation will increase, or at least not fall to, let alone below, the Fed’s target. Therefore, the Federal Reserve will be backed into a corner, and the last few ‘pre-election rate cuts’ will be nothing but a distant echo. In an extreme scenario, the chance of a rate hike—although still very low, no longer seems completely abstract (as the market saw it just a few months ago). If we add to this the weakness of the economies in Europe and China and their yields, it’s no surprise that capital is opting for nearly 5% paying US ‘treasuries’. The financial market in mid-January priced in only one rate cut in 2025, whereas in October, it saw hopes that the Fed might cut rates up to six times.
“I expect that OPEC will raise production if it does not want to lose market share, so the rise in oil prices will concern the first quarter, and it will change in the next quarter,” assesses the XTB expert.
And what will happen at Polish fuel stations? The currency market is significant, and on the USD/PLN currency pair, the level has risen and exceeded 4.15.
“It is possible that these levels will reach 4.20, and even 4.25, and if the Brent crude oil price remains above $80, we may return to Pb95 prices of 6.30-6.50 PLN,” comments M. Stajniak from XTB.