There is growing potential for gasoline prices to drop to around 6 PLN per liter. Oil prices are falling, and investors are waiting for the U.S. Federal Reserve (Fed) to cut interest rates, which could stimulate the global economy, though the impact may not be seen until next year.
In the last 30 days, the price of Brent crude oil has dropped by 11%. The maximum contract price reached USD 82.28 per barrel, while the lowest was USD 68.81. Before the end of the first half of September, the price was USD 2.5 lower than the mentioned minimum. Since the start of the year, oil has fallen by 8.2%, and over the past 12 months, it has dropped by more than 18%.
Just six months ago, there were fears that oil prices would rise, but now the baseline scenario is different, primarily due to increasing supply against relatively weak and fairly stable demand.
“A lot of supply will be flowing into the market in the coming months because OPEC+ is sticking to its decisions and plans to restore about 180,000 barrels per day starting in October,” said Michał Stajniak, Deputy Director of the Analysis Department at XTB, in an interview with MarketNews24. “This increase will occur monthly until September next year, fully reversing the previous cuts of 2.2 million barrels per day.”
Thus, oil remains under pressure, even though supply and demand are currently balanced.
The weakening demand was linked to a five-year low in China’s oil imports since May. In the U.S., during the summer period, demand growth was weaker than usual. Therefore, prices remain low, and investors were largely unaffected by the complete (though temporary) halt of oil production in Libya.
Investors are waiting for a rebound in demand from China and for interest rate cuts by the Fed, following similar moves by the European Central Bank (ECB). These cuts could stimulate economic growth and, in turn, increase oil demand. However, stronger economic growth is not expected until next year.
“Supply will slowly increase over the next 12 months, but there is considerable uncertainty on the demand side,” commented the XTB expert. “If signs of a recession emerge, the price of oil could drop to around USD 60 per barrel. However, it is more likely that by the end of the year, the price will settle around USD 70.”
The Polish zloty remains strong, with the dollar trading at 3.90 PLN, which favors lower fuel prices at gas stations. This summer, the end of the holiday season did not lead to significant price increases at the pumps, as there were no fundamental reasons for a sharp rise.
“In the fall, Pb95 gasoline prices could drop to around 6 PLN per liter if low oil prices persist and the zloty remains strong,” Stajniak from XTB estimates. “However, this is not yet the baseline scenario.”
