On Friday morning, the Norwegian krone weakens sharply against the euro, which now costs 9.72 kroner, after being at 9.45 at the beginning of the week.
The price of a barrel of fuel oil – which now costs 102 dollars – has also fallen sharply in the last 24 hours.
Both the oil price and signals from Norges Bank have a significant impact on whether the Norwegian krone strengthens or weakens. This week came two messages that suggested that the krone will weaken in the time ahead:
- The price of a barrel of fuel oil falls markedly after the White House announced on Thursday that the United States was considering releasing a record amount of oil on the market. The news of a possible release from the strategic oil reserves caused the oil price to plummet to 105 dollars a barrel in a few hours.
- Norges Bank will sell NOK 2 billion per day in April, according to a statement from the central bank.
Predicts further weakening
– This means that the window for a stronger Norwegian krone has closed, says Nordea analyst Dane Cekov in a statement on Thursday.
He writes that the message from Norges Bank came earlier than expected. Norges Bank must sell away Norwegian kroner as the Treasury is replenished with oil money at a pace that few had expected.
Cekov doubts that a euro will cost less than NOK 9.50, regardless of whether the oil price should be raised in the future or there is more unrest in the market. Nordea Markets predicts that the euro will cost 9.75 in three months and ten kroner by the end of 2022.
However, should oil and gas prices fall considerably, the weakening of the krone against the euro could be far greater.
The price of oil fluctuates sharply
In light of the sanctions against the Kremlin, the oil price has been very high – and at some point in March, a barrel of North Sea oil cost 139 dollars. Since then, the oil price has fallen somewhat, but is still around 70 per cent higher than it was a year ago.
The United States is the world’s largest oil producer with a daily production of 12 million barrels per day. That is two million daily barrels more than Russia.
The oil cartel Opec and the partner countries met on Thursday to discuss the possibilities for increasing oil production. The Oil Alliance decided that the 13 members and the ten partner countries will continue with the planned production increase of 432,000 barrels per day in May.
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