the price of “black gold” standard grades in the course of trading day on Tuesday down amid appreciation of the dollar and on fears of oversupply of raw materials on the market.
By 13:24 GMT August futures for North sea petroleum mix Brent fell by 1.94% to the previous close to $40,01 per barrel, the July futures on West Texas crude fell by 2.54% to $37.2 per barrel. Morning quotes grew stronger, according to PRIME.
As recalled by a senior risk Manager IR “Algo Capital” Vitaly mangos, crude oil futures, easing gradually receded “from a medium-term highs”. “They have ended the initial reaction to the news that the international agreement on the reduction of oil production in the OPEC format+ 9.7 million barrels per day will be extended until the end of June. Meanwhile, the media reported that the North American producers of shale oil have begun to partially restore production at the background of rising oil prices. In addition, it became known about the plans for the resumption of oil production at Libya’s largest field Sharara”, — stated in the review of the expert.
for his part, head of the analytical Department AMarkets Artem Deev suggests that “the lack of positive reaction to the agreement could be related to doubts about traders that commitments to reduce production will be implemented in full”. “There is a high probability that non-compliance of quotas for the extraction will significantly reduce the efficiency of the whole transaction. Lower prices could also lead comments by the energy Minister of Saudi Arabia Prince Abdul Aziz bin Salman, who declared on Monday that “the Gulf countries, which promised to voluntarily reduce production by another 1.18 million barrels a day since June, do plan to extend that further reduction of the current month””, — the expert specifies.
the head Department of data analysis CEX.IO Broker Yuriy Mazur notes that “investors took profit on the “black gold” held after the transaction OPEC+ and sent oil into a technical correction.” “Market participants remain concerns about the fragility of the energy market, so hedge risks in a traditional defensive assets,” — says the expert.
we Add that since the beginning of this year on the global oil market rode several waves of falling prices for “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 fromthe account 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 day.
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