Nervousness remains high after sharp correction
The international crude oil markets have lost considerable momentum in recent trading days. After prices rose sharply at times at the beginning of May as a result of geopolitical tensions in the Middle East, a noticeable countermovement has recently set in. Market participants reacted primarily to hopes of diplomatic progress between the USA and Iran and a temporary easing of tensions around the Strait of Hormuz.
Although the price of Brent crude oil remains at a historically high level, a corrective market movement has recently dominated in the short term. This currently shows an important difference between the price level and market direction: the oil market is by no means cheap, but is also no longer in a dynamic upward trend as it was at the beginning of the month.
Fundamentally, the supply situation remains comparatively solid overall. High production volumes in the US and stable export flows outside the Middle East are having a price-limiting effect. At the same time, falling US stockpiles and the ongoing fragile geopolitical situation are ensuring that major price declines have not yet been sustained.
For the agricultural markets, the latest developments mean a slight easing on the cost side. In particular, diesel, transport and, in some cases, fertilizer costs are no longer under the extreme upward pressure of the first half of May. Nevertheless, the price level in the energy sector remains high enough to continue to have a noticeable impact on production costs in agriculture and the food industry.
In the short term, the oil market is likely to remain strongly news-driven. Political developments in the Middle East, changes in US inventory data and general economic sentiment are likely to continue to cause high daily fluctuations. Overall, the market is currently moving in a volatile sideways phase at a higher level rather than in a clear upward or downward trend.
