Oil becomes more expensive due to optimism about production cuts

the price of “black gold” standard grades in the course of today’s trading, boosted by optimism about a gradual recovery in the balance of supply and demand in the global market.

as of 8:15 GMT, August futures for North sea petroleum mix Brent fell $0,34 to the previous close to $of 41.85 a barrel, the July futures for West Texas WTI — at $0.32 – $of 39.16 per barrel, reports “Finmarket”.

As noted by analyst IK “VELES the Capital” Elena Kozhuhova, yesterday, “OPEC reported that in may the country has fulfilled commitments to reduce oil production in the framework of the agreement on 87% and has promised to exert pressure on violators”. “Iraq and Kazakhstan, in particular, intend to improve his discipline on the implementation of the transaction, and this means that world oil supply has become more limited,” the review says an analyst.

At the same time, experts on the stock market “BCS” Igor Galaktionov, major oil traders Vitol and Trafigura was told about the good pace of recovery in oil demand. “If earlier the main contribution to the recovery of demand has made China, in June a growing proportion of consumers from Europe and the USA”, — emphasizes the expert.

meanwhile, warns the head of the analytical Department AMarkets Artem Deev, “a lot of traders believe that the percentage of execution of the agreement next month on the backdrop of the recent price growth could be even lower may.”

moreover, IAC analyst “Alpari” Vladislav Antonov did not rule out that “a new outbreak of coronavirus in China will curb growth ahead.” “The price may return to level of $43,25. To move above, need new drivers which there is no” — sums up the expert.

Recall that from the beginning of this year on the global oil market rode several waves of falling prices «black gold”. The negative situation caused by a whole complex of factors: a General overproduction of raw materials, a sharp drop in demand due to the rapid spread of coronavirus infection COVID-19 (March 11, was declared a pandemic) and concerns about its impact on the global economy and the collapse of the deal, OPEC+ (officially from April 1, but in fact, after fruitless negotiations of the countries-oil producers at a meeting on March 6 in Vienna). Just last circumstance was the trigger to the collapse in oil prices. Moreover, Saudi Arabia announced plans to increase production and lower oil prices. Later, the desire to lower the prices declared Iraq, Kuwait, UAE and Nigeria.

For the first quarter of 2020, the price of Brent crude fell by 65.6%, while WTI rose by 66.5%. And at the end of March the cost of June futures on Brent fell below $22 per barrel (to $of 21.72), that is, to at least March 2002, and the may futures for WTI to us $20.1.

on April 12 OPEC countries+ finally agreed on a new deal, joined by 23 States. The agreement will be valid for two years, from may 1, 2020 to may 1, 2022-th. In may—June this year, the production cuts will amount to 9.7 million barrels per day (from October 2018), then — until the end of 2020 — 8 million barrels, and 6 million by the end of April 2022. While Russia and Saudi Arabia base count will be 11 million barrels per day (of the Russian Federation in the first 2 months will reduce production at 2.5 million barrels per day). New business OPEC+ was a forced reaction of oil producing countries on the situation in the market and pressure from the United States. Overall, however, it does not cover the volume decline in world demand for the same in the market have accumulated huge reserves of raw materials.

on June 6, the member countries of OPEC+ extended on a month — until the end of July — the period of validity of the agreement to reduce oil production to 9.7 million barrels per sutki.

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