Moscow, February 4 – “News.Economy” As the optimists hope, the oil market will be able to exhale in March, after the February peak of the epidemic of the coronavirus. And then more attention will also draw on geopolitical events, like the US-proposed peace ∎deal of the century∎ – with the newly emerging combat cart.
Quarantine polojeniyem continuing spread of the coronavirus still remains a priority for the markets. According to the latest data, the number of cases in China exceeded 17,2 thousand people, of them died 361 people (nearly 150 people got sick out of China, one of whom died). In this regard, the world health organization (who) has declared a state of emergency on an international scale. In such circumstances, oil prices in the 20 days of January, exceeding $65 per barrel. opened the current week in early deals with marks below $57. And by 16:50 Moscow time on Monday was recorded at $58,2 per barrel of Brent.
and a half weeks, said a leading analyst IK “VELES the Capital” on oil and gas sector, Alexander Sidorov, there is a downward trend on the background of the exponentially growing number of infected. ∎I think in a situation where ∎medical fields∎ not come the good news, and the negativity grows, it is difficult to count on the reversal. So expect further fall in oil prices this week. In General, in February the dynamics of prices will depend on the success of the fight against the virus∎. – identified Sidorov. As he recalled, Brent crude has lost 10% since 20 January – as the epidemic of the coronavirus. Its influence is still great and will apparently continue in the coming months. Slowing is possible if the spread of the virus will slow down. But while about it to speak early: despite the fact that the number of infected people has increased from 291 cases per 20 7771 Jan to 30 Jan, elaborated the expert.
among other things, said independent analyst Vladimir rozhankovsky, China on the eve reported a decrease in the needs of its refinery in notFTI is 20% or 3 million barrels per day. Proishodyaschee related to the quarantine by reducing the burden on public and personal transport, as well as with a decrease in the volume of business, including foreign trade, transport. ∎It all goes aperkot not oil in General, but according to Brent, where imports of China is tied to 75-80%∎. – negotiated rojankovsky. According to him, the situation and the expected environment in another portion of macroeconomic statistics from the US Department of energy on oil reserves, which, according to the consensus forecast will likely show a contraction, is unlikely to significantly help.
As has informed on Wednesday the energy information administration of U.S. Department of energy (ELA), following declines in the previous period, for the week ended 24 January, commercial oil stocks in the country increased by 3.5 PHM barrels to 431,7 million While oil production remained at the level of 13 million barrels per day. While according to the company Baker Hughes, for the week to 31 January, the change prior to the increase in the number of drilling rigs in the United States has again come decrease – 1 unit to 675 units.At the same time, said Alexander Sidorov reached 4-5 December 2019 by OPEC members+ the agreement to increase the quota originally allowed in 2020 to keep the market in balance, so that the adopted production cuts helped to remove excess oil due to production growth in the United States.
But now – amid the falling oil prices, the media began to report on the possible rescheduling of the meetings of the parties to the agreement, previously scheduled for early March. So, it is not excluded that the meeting of the technical Committee of OPEC+ could take place on 4-5 February (not March 3, as expected) and the subsequent Ministerial meeting will be held or 8-9, or 14-15 February (instead of March 5-6).
there is hope, said Vladimir rozhankovsky that the upcoming February 4-5 OPEC meeting Saudi Arabia offered to cut production by another 500k barrels per day. However, the new the escalation of civil conflict in Libya has reduced oil production in this country nearly 1 million barrels. But it practically went unnoticed by the markets, captured only one topic of coronavirus. And then all of the above, in the aggregate, allows the calculation, at least on a temporary strengthening of the Brent price. at least to levels of $58-58,50 a barrel, said an independent analyst.
Picture predlozheniia intervention in the situation of the countries-participants of agreements on OPEC+, warned analysts IK ∎freedom Finance∎ the cost of a barrel of oil this week could fall below $45. The possibility that indicates, including the status of the futures market: players lay abnormally narrow spreads, anticipating a protracted decline in prices for raw materials. Now the market lives waiting for response from the main exporting countries: and after the $45, the next psychological target can become the level of $50. From his probable upside correction risk of a sharp reduction in shale oil production in the United States. The number of bankrupt companies in the oil and gas sector has reached a peak (208 companies over five years), and the total bad debt across the industry exceeded $120 billion, stated the authors of the review.
In the medium-term Outlook the recovery in oil prices will mainly depend on the normalization of global trade transport, linked to China’s success in overcoming the main negative sensation early this year, formulated by Vladimir rojankovsky. He added: ∎While I remain a cautious optimist. According to emerging statistics, exponentially increasing the number of cases and deaths is observed. So, it is likely that in March, we will be able to breathe a sigh of relief∎.
Recall, as explained in our last forecast, Advisor to the Director on scientific work of the Central research Institute of epidemiology of Rospotrebnadzor, academician Victor Maleev, while Samedition growth in the number of cases is not visible, but given the ongoing security measures, it is possible to assume that the peak of the epidemic can be overcome during February.
But when the market is, in fact, able to exhale with some relief, then also remember about other related geopolitical events, such as a pump is presented on January 28 by US President Donald trump, in the presence of Prime Minister of Israel, Benjamin Netanyahu, ∎deal of the century∎ – of the peace plan for Palestinian-Israeli settlement. This plan, in addition to recognition of Israeli sovereignty over the existing ones in the Palestinian territories Jewish settlements, in particular, provided the recognition of Israel’s capital “indivisible” Jerusalem – in the formation of the capital of Palestine, “East Jerusalem” – on the outskirts of the contested city. The document also meant the demilitarization of a future Palestinian state that would be carried out under American and Israeli control and under their promises to raise about $50 billion investment. Designed without any attempt to coordinate the positions of both sides of the conflict and find a mutually acceptable compromise solution similar to the plan originally presented by the nonsense in international practice of peacekeeping.
However, said Alexander Sidorov, if the proposed measures led to the reduction of tensions in the region, it would increase the pressure on oil prices. ∎But US involvement in the Middle East is usually accompanied by military conflicts that oil traditionally reacts growth∎. summed up, leading analyst IK “VELES the Capital” on oil and gas sector.
But maybe the old anecdote about how the parts of a baby stroller made with modal businesses, somehow always comes out a machine gun, in this case will not be relevant?
As noted by a leading researcher of the Center for Arab studies Institute of Oriental studies Boris Dolgov, the plan has been openly landmarkthe IAOD on the interests of Israel, in favor of which, in particular, it was proposed to transfer part of the Palestinian territories, leaving Palestinians in return for the agriculture land. However, given the multiple contradictions in the Arab world and the current split in the Palestinian national movement, in Washington and tel Aviv probably hoped that eventually this will be able to pass. But as demonstrated by recent events, ∎the deal of the century∎ not gone: it was not acceptable for the majority of countries in the Arab Muslim world and the Palestinians themselves. And obviously promised to attract $50 billion investment is not able to change the corresponding relationship.
In this regard, continued Debt in the region is inevitable further escalation of the situation. In fact, it is already happening. As, for example, in the area of the Palestinian-Israeli border, where the parties have already exchanged blows. In such conditions Russia continues to advocate that the settlement took into account international law (and in particular, the UN General Assembly resolution of 1947 on the establishment of the Israeli and Palestinian States). and on the basis of equal dialogue. At the same time, Moscow could strengthen its efforts as a mediator, but you need to understand that in the negotiations clearly articulate not only the Israeli line, representatives of the Palestinian side, first of all, should unite and develop a common position, said leading researcher of the Center for Arab studies Institute of Oriental studies, Russian Academy of Sciences.
Natalia Prihodko Text: News.Economy