Fuel prices are at record highs. It’s still a long way to go, but changes in the oil market are likely to bring relief next year.
With an Average National Retail Price of above €2.10 for a liter of petrol, it is currently crying with the cap on at the pump. However, the oil market is stirring and the fuel price is of course largely dependent on this. Shinwoo Kim, an expert on natural resources at T. Rowe Price, estimates that this will bring about changes fairly quickly. There is a good chance that prices will eventually fall back to a more or less normal level. High oil prices are the cure for high oil prices, he writes in a report for the American investor.
Kim explains that we’ve seen this kind of “artificially high oil prices” before in history. When there is a period of low oil consumption, the oil market tends to skyrocket when demand is suddenly high again. ‘The reduced demand then bounces back to artificially high levels to rekindle supply and balance the market.’ So the prices suddenly become huge, while they shouldn’t have to. He expects to see the drop in oil prices and thus fuel prices next year. We will have to be patient for a while, because prices will continue to rise in the coming quarter. Even with a global economic recovery, it is unlikely that higher oil prices will last for long. They should return to normal levels sometime next year,” Kim writes.
A message from the International Energy Agency (IEA) seems to confirm Kim’s analysis. The organization reports that supply is back on track to meet demand. The oil market is “still tight, but an end to the price increases is in sight,” according to the IEA. If the supply continues to grow, prices may fall again. However, rising gas prices could slow down the process.
– Thanks for information from Autoweek.nl