In April; Air and road travel around the world fell sharply due to the outbreak of the corona virus, pushing oil prices below $ 16 a barrel. The threat of the virus remains on the oil market as its resurgence has once again clouded the outlook for crude oil demand.
According to the report, if the second wave of coronavirus infection in China, India, Europe and the United States continues in the second half of this year, demand in 2020 may decline by 11.2 million barrels per day. “Brent crude has stabilized at around $ 45 a barrel, but they do not expect the market to rise higher in the short term,” analysts told Reuters.
Oil prices entered a downward phase yesterday. However, the price of black gold remained near “the highest price level in the last five months” following some optimistic signals of a gradual decline in the impact of the Corona virus on fuel demand and the efforts of major crude oil suppliers to adhere seriously to production cuts.
Yesterday, at the time of writing (16:30 Tehran time), Brent crude fell 63 cents to $ 44.27 a barrel and returned to the $ 45 resistance. US crude fell 58 cents to $ 42.24 a barrel. Thus, Brent performance is negative this week and WTI performance is positive.
*** positive and negative signals in the oil market
According to available reports, the interference of positive and negative signals in the market has prevented a sharp rise or fall in prices and has entered the waiting phase.
In fact, although the decline in demand and oil prices due to the outbreak of the Corona virus has occurred very quickly, but its recovery will be slow and long. One sign of a slowdown was the decline in Indian crude oil imports in July.
This month, India’s crude oil imports fell to their lowest level since March 2010 due to the resurgence of the Corona virus and its impact on the country’s refineries. The emergence of this sign in India as one of the drivers of growth in crude oil consumption is while experts do not expect India’s crude oil demand to return to pre-corona times in the short term.
*** Long recovery period of the oil market
Meanwhile, with signs of improving demand emerging from data released by the US Energy Information Administration (last week’s decline in US commercial crude oil reserves), the second wave of the corona and rising crude surpluses have cast a positive shadow over the figure.
Along with the 1.6 million barrels cut in US commercial crude oil reserves for the third week in a row, which has always been seen as a sign of growing demand in the oil market, China’s growing demand has recently become a new stimulus for the oil market.
But these are two positive developments to influence the pessimistic view of the US Federal Reserve and OPEC Plus about the bleak outlook for oil demand due to the outbreak of the Corona virus; They did not have much power. At the same time, the release of disappointing statistics on the US unemployment rate has also contributed to the weakening of positive factors in the oil market.
Last Thursday, oil prices fell about 1 percent as the number of jobless claims applicants in the United States rose above forecasts, raising economic concerns over the spread of the Corona virus. According to available reports, the number of people applying for unemployment benefits in the United States for the first time in a week has once again exceeded one million. Despite the release of unexpected US unemployment figures, a sign that the US economy has not recovered during the Corona, none of the Federal Reserve officials has yet shown a desire to cut interest rates further.
*** Brent stability in the $ 45 range
In early June (June-July), oil prices, which had fallen below zero to $ 40 a barrel, stopped in this range. However, after this period, oil prices entered an upward trend, despite the continued efforts of countries to curb the corona outbreak.
However, the message of the OPEC Plus Monitoring Committee meeting last week was that the oil market was still fragile and its prospects were unclear. But alongside this disappointing outlook, OPEC and its allies say they have focused on adhering to members who have had surplus production in recent months to ensure their adherence. According to Reuters, OPEC Plus has found that some members have to cut production by 2.31 million barrels per day to make up for the surplus in recent months.
Among OPEC members, Iraq and Nigeria had the lowest adherence to production cuts, and even the UAE, which voluntarily cut production further in June, had a surplus of 50,000 barrels per day between May and July.
The OPEC Plus internal report points to demand risks and shows that the group expects demand for oil to fall by 9.1 million barrels per day in 2020, which is 100,000 barrels per day higher than previously forecast.
According to the report, if the second wave of coronavirus infection in China, India, Europe and the United States continues in the second half of this year, demand in 2020 may decline by 11.2 million barrels per day. “Brent crude has stabilized at around $ 45 a barrel, but they do not expect the market to rise higher in the short term,” analysts told Reuters.
*** Waiting for OPEC Plus production to continue to decline
“The release of US unemployment data shows that the Corona Pandemic is targeting the global economy and total consumption, and even if the Corona vaccine is available, OPECPlus may be due to persistent weak demand,” a senior commodity market analyst at VI Investment Corp told Bloomberg. Have to continue to reduce production. According to Reuters, the production of OPECPlus in May reached 9.7 million barrels per day, which was a record in its kind. However, their production decreased this month to 7.
/ Reached 7 million barrels per day. An internal OPEC Plus report seen by Reuters indicates that the organization’s additional production of 2.31 million barrels is expected to be cut during August and September. Although the mechanism of this elimination is not mentioned, but if this amount of overproduction is spread in two months,OPEC Plus production will fall to about 8.85 million barrels per day.
In April; Air and road travel around the world fell sharply due to the outbreak of the corona virus, pushing oil prices below $ 16 a barrel. The threat of the virus remains on the oil market as its resurgence has once again clouded the outlook for crude oil demand.
*** Signs of oversupply
At least in the short term, interest rates do not appear to be reaching negative levels in the United States, such as the eurozone, Switzerland or Japan. This means that other currencies will lose their purchasing power against the dollar, and naturally their ability to buy oil, which is valued in dollars, will decrease.
The difference between last month and this month’s prices for the Brent crude index, which is currently at its highest level since May (Contango), is a serious signal of oversupply concerns. Thus, with US crude oil inventories declining last week, the outlook for consumption is still bleak. In such circumstances, the Baton Rouge ExxonMobile refinery in Louisiana has shut down one of its two active units due to a lack of demand. The refinery had already shut down another production unit.
Thus, the weak profit margins of refineries in the United States mean that more American refineries will reduce their operations. Finally, it remains to be seen where the positive and negative signals of the oil market will move the price of this commodity, above the $ 45 peak or moving to lower levels.
این مطلب بدون برچسب می باشد.
ثبت دیدگاه