the Quiet life of quotations of “black gold” came to an end. No reduction of oil production may be agreed on 15 July at the OPEC conference+ that will lead to another reduction in the cost of hydrocarbons. Pull down oil prices is the lack of demand for energy, the world market which will be restored not earlier than in a year. In turn, the second wave of coronavirus, which are prepared by many countries, may eventually drive the price of “black gold” to the bottom line.
the center of attention at the forthcoming conference of the Organization of countries – exporters of oil (OPEC) and OPEC, which is scheduled for July 15 and will be held in online mode, will be Saudi Arabia. According to The Wall Street Journal, in Riyadh believe that further curb production to maintain oil prices is tantamount to “suicide” for the cartel. During the negotiations, the Saudis will offer to mitigate the quota by 2 million barrels per day and to reduce production not by 9.7 million, and 7.7 million barrels per day. The price of oil immediately reacted to the news quotes of “black gold” dropped to the psychological level of $40. Experts do not exclude that this level in the near future will already seem high.
the First signs of an impending protracted fall in oil prices could be felt at the end of last week, when September futures Brent and WTI fell almost 2.5%. This fall for one day was the strongest since early July.
According to experts, another drop in oil prices caused by lower demand due to the ongoing pandemic coronavirus. In many leading countries, in particular in the United States, the world’s largest oil consumer, the process of removing the limitations frozen. “It is not difficult to suggest that the recovery of energy demand in the second half of the year will be weak” — analysts Capital Economics. Overall in the second quarter was 16.4 million barrels per day below last year’s values. According to the International energy Agency, in the third quarter, demand will fall by 6.5 million barrels per day compared to the year 2019, although a month was expected to drop to 5.9 million “barrels”.
In this regard, in the opinion of the head of Department information and analytical content “BCS” Basil Karpunina, the restoration of the limits of production within OPEC+ still looks quite premature. “Initially we are going to restore mining a month ago, then decided to wait. Now the situation has not changed — not become worse. But the positive dynamics is also not increased. There is a high risk of a slower recovery in oil demand than previously expected, as the decline of the pandemic in the world as a whole is not observed. Moreover, R��de regions re-introduced restrictions. As a result, the market reaction to the potential increase in production by 2 million barrels per day will be negative and the price of Brent drops below $40,” predicts the expert.
“the oil Market may be destabilized and other reasons, in addition to increasing production in the OPEC+, — said the head of analytical Department AMarkets Artem Deev, —Therefore, a direct relationship between the volume of oil produced and quotations can be arbitrary. The market reacts not so much on numbers, but on the negative statements and the facts.”
the Expert notes that, in addition to OPEC+ production are going to increase the US, because the American company was quite happy with quotes at $40 per barrel, and they do not depend on the decisions of the Alliance. Against this background there is a growing danger of a second wave of the pandemic — the incidence in the United States and other countries, breaking records. The aggravation of the disease will lead to new quarantine measures and falling demand for raw materials, which will surely drop the quotes.
“the decision of OPEC+ the gradual restoration of mining volumes is unlikely to lead to the emergence of boom and rising prices. But when it is accompanied by an official who statement on the second wave of the pandemic or quarantine in the largest markets (China, USA, India, EU) then the odds can turn around and fall even below $30 per barrel,” — says the Deev.