International investors are actively increasing investments in oil. According to the Emerging Portfolio Fund Research (EPFR), over the past week to appropriate funds received $4 billion and over five weeks — more than $11 billion. However, these volumes are not enough to compensate for falling demand for oil due to the quarantine measures adopted around the world.EPFR indicate a high demand of international investors for investments in oil. According to “Kommersant”, based on data from Bank of America (account EPFR), for the week ended 22 April, the international investors have invested almost $4 billion in exchange-traded funds oil. This one and a half times higher than the previous week. From the beginning, the relevant funds received more than $16 billion, of which more than $11 billion over the last five weeks.However, current investment flows are insufficient to reverse the negative trend prevailing on the oil market. According to Reuters, over the past five weeks the cost of North sea oil Brent has fallen in half, to $20 per barrel. Since the beginning of the year prices fell three times. Pressure on oil prices is having a real demand, which fell due to the quarantine measures adopted around the world. According to forecasts of the International energy Agency, in April the demand will fall to 29 million barrels. Given the fact that the main countries-consumers are not in a hurry to remove in the near future all restrictions, imbalances may persist in may. The most acute situation of excess supply there is in the US, where problems are exacerbated by the lack of available storage. In such circumstances, the price of oil WTI for the first time in the history fell into negative territory (see “Kommersant-Online”, 20 April). According to the chief macroeconomist and head of advanced research of the Julius Baer Norbert Ruecker, storage is not yet full, but it is obvious that the remaining volumes were already fully booked.Under pressure was more distant contracts. According to Reuters, the cost of the June WTI contract on Tuesday was below $13 a barrel in two times less than last Monday. According to the head of the Department experts on the stock market “BCS” Basil Karpunina, there remain risks that the price of the nearest contract WTI becomes negative, although “many participants are willing to reduce positions in advance.” Active release of funds from the may contract at the beginning of last week, caused by a fall in the value across the curve of the WTI contracts. According to the head of analytical Department of Bank “Opening” Anna Marinou, now funds rebalancing of a portfolio of futures from July to September. “According to the standard investment strategy United States Oil Fund (USO, one of the largest players in this market.— “B”) was 20% in the June contract, 50% in July and 20% and 10% in the following months, respectively. Considering aboutyour batch of oil and expected recovery in the third quarter, as well as the requirements of the exchange to limit open positions for each participant, the USO changed the scheme of investments, and now it looks like 20-40-20-20%”,— explained Ms. Morin. However market participants doubt the possibility of falling prices on the European market of oil below zero, because there are no problems with the shipment of raw materials. According to Anna Marinou, the Brent futures contract is cash-settled, the calculations for it are made in cash.In this case it feels Russian oil Urals. If in normal times, domestic oil was trading at a discount to the North sea, at the present time is at a premium. According to Reuters, the spot market price of Russian oil is $13,7–15,5 per barrel, at the same time Brent is trading at USD 11.5 per barrel. Urals — heavy oil, and currently on the market there is an overabundance of light and ultra light oil due to high demand, Saudi Arabia. “In a situation of shortage of Urals sold at a premium. From may Russia reduces oil export through the ports of the Baltic sea and Novorossiysk on 40%, according to the decision of OPEC+. Thus, the supply and demand for Urals in these ports shifted toward the deficit, hence the price premium to Brent,” notes Anna Morin.Vitaly Gaydayev
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