Orion Farming Group Fuel Update 02/07/25
- Orion Farming Group
- Jul 2
- 3 min read
Average prices overall have continued to fall this week as indicated in the pricing graph. Deliveries remain between 2 – 5 working days, dependant on the Supplier & area they cover.
Fuel Price Outlook: A Tense Stability
The oil markets have entered a phase of tense stability, with prices holding within the range predicted last week. However, new and conflicting pressures are now at play, creating a delicate balance and an uncertain outlook for the coming days.
Where We Are Now
After the dramatic fall in prices following the ceasefire announcement between Israel and Iran, Brent Crude has found a floor. As of today, the price is trading in a familiar territory of around $68-$69 per barrel, consistent with our forecast for the past week. The initial relief rally that pushed prices down has been replaced by a market warily watching new developments.
The Key Short-Term Drivers
The "geopolitical risk premium" that had vanished has begun to creep back into the market, countered by signs of weakening demand and potential supply increases. This has created a tug-of-war between bullish and bearish sentiments.
Pushing Prices Down:
Rising U.S. Inventories: In a significant reversal from the previous week, the latest data from the U.S. Energy Information Administration (EIA) revealed an unexpected and substantial build in crude oil stockpiles. This suggests that demand may be softening or that supply is outpacing consumption, a bearish signal for prices.
Anticipated OPEC+ Production Increase: The market is keenly awaiting the upcoming OPEC+ meeting. The consensus expectation is that the group will proceed with a planned increase in oil production. The prospect of more supply is putting downward pressure on prices.
Global Economic Headwinds: Broader concerns about a slowdown in the global economy continue to weigh on the demand outlook for oil.
Providing a Floor for Prices:
Renewed Geopolitical Tensions: The primary bullish factor this week is the news that Iran has suspended its cooperation with the United Nations' nuclear watchdog. This development has reintroduced a level of geopolitical uncertainty and raised concerns about potential future disruptions to supply, providing a floor under prices.
Weaker U.S. Dollar: A softer U.S. dollar is also offering some support to crude prices, as it makes oil cheaper for holders of other currencies.
What to Expect Over the Next Week
The market is currently in a holding pattern, caught between the opposing forces of renewed geopolitical risk and bearish supply and demand fundamentals. The upcoming OPEC+ meeting will be a critical event, and its outcome will likely set the direction for prices in the short term.
For the week ahead, expect continued sensitivity to news from both the geopolitical and economic fronts. While the immediate sharp upward pressure on fuel costs remains off the table, the situation is far from settled. Any escalation in the standoff with Iran could send prices sharply higher, while a confirmed production increase from OPEC+ could lead to a test of lower price levels.
The most likely scenario for the coming week is for Brent Crude to trade in a range of $65 to $72 a barrel. The market is balanced on a knife's edge, and any significant news will likely be felt at the pump.
Fuel price outlook section provided by Investing.com and Demand Economics.
Please note that any opinions expressed in this update are sources from market information / analysis and do not represent views of Orion Farming Group. Orion Farming Group accepts no responsibility for any Member decisions made on the basis of information provided in the weekly fuel update.
Applications and Data Analytics for Orion developed by Demand Economics Ltd.
