The past week in the oil market have worried market participants. The quotations of the European fuel grades down to the end of June, a decrease from the local maxima of this month amounted to 6-7%. In part, this movement was defined by fears of a second wave of the pandemic in the world and its impact on commodity markets. However, experts are positive and expect a reduction in excess reserves of oil in the third quarter, and with it the growth of quotations up to $50 per barrel by the end of the year.According to Reuters, the quotations of the European grades of oil in the spot market on Friday fell to their lowest levels since the end of June. The price of Russian Urals have reached $42,29 per barrel, the quotes of North sea Brent reached $42 per barrel. The decrease compared with the beginning of the week was 6-7%. By the end of the day the situation had improved somewhat and quotes came back above $43 a barrel.Among the negative factors operating in the oil market, experts mark growth of number infected with the coronavirus. As a senior analyst at Alfa-Bank Nikita Blokhin, recent events in the USA, Australia and some countries in Western Europe showed that the “policy of removing economic and social constraints is a serious risk of morbidity”, which could threaten the developed economies of the second wave of the pandemic. This in turn has a direct impact on expectations of further recovery in oil demand.In addition, as noted by Mr. Blokhin, the growth of quotations and keep significant reserves of oil pumped into storage tanks in China, India, the US and the EU, which creates excess supply despite production cuts under OPEC deals+. So, in the last report of the Agency, the IEA notes that in June the OPEC countries+ completed the transaction to reduce production by 108%, including Saudi Arabia at 138%, Russia 100%. However, the Agency notes that oil stocks in OECD countries grew by 81.7 million barrels, to 3,216 billion barrels in may. This result is significantly above the average for the last five years.Despite the achievement of local minima, the experts generally are positive. According to the economist, “BCS Premier” Anton Pokatovich, to talk about the transition to a full-fledged risk-off (avoiding risk) it’s still early. According to the strategist of Sberbank’s operations in the commodity markets Michael Sheibe, targeting Brent prices at $35 per barrel is an unlikely scenario, including the fact that the pace of recovery “oil lagged behind other global assets in may-June”. In addition, he notes that at current price levels in the market of few sellers.This enhanced expectations that the global economy as industrial activity, transitioning to a gradual recovery that allows to recover and oil demand. The evaluation of Mr. Pokatovich if demand in July-August will recover at a moderate monthly rate of growth (about 5%), then at the end of August, the market may form a deficit in the amount of 1-1,5 million barrels per day. In the future September-October the volume deficit may increase to 2-3. 5 million barrels per day, which will allow to accelerate process of normalization of the world’s reserves of crude oil. In his opinion, to a more sustainable growth of the oil will go in the future, the second half of the third quarter. Assessment of Nikita Blokhin, on the demand recovery and transition of the market into a state of supply shortage will begin the active phase of the reduction of crude oil reserves that will allow to provide the growth of prices for Brent oil down to $45 per barrel by the end of September.Michael Sheibe also expects a gradual transformation of the oil market in July, and then a more rapid rebalancing and sustained a significant reduction in global hydrocarbon reserves. According to him, this will ensure the upward trend in Brent price by the end of the year to $50 per barrel. However, in this case, much will depend on whether members of OPEC+ strictly control the supply as the recovery in global demand. Since the price of WTI of around $50 per barrel, according to Mr. Sabe will probably start to increase drilling activity in the United States.Dmitry Mikhailovich
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