The further fate of the OPEC + deal will be known at the end of the summer period, when countries reach 100% the result, I told ABF "Economics today» leading expert of National Energy Security Fund, Lecturer of the Financial University under the Government of the Russian Federation Stanislav Mitrahovich.
The global oil market is trading in positive territory – energy prices, according to bidding data, rushed up, increased on the back of estimates from the American Petroleum Institute (API) a significant decrease in stocks of this raw material in the United States for the week. note, that stocks in American oil storage tanks have been growing since April 2020 of the year.
At the same time, oil companies of the United States of America continue to increase production volumes, ignoring the ongoing spread of coronavirus infection in the world and a sharp drop in energy demand due to the pandemic. At present, according to published data from the US Department of Energy, the country's commercial oil reserves are at a record level in 541 million barrels of.
“The controversial American news about production also has an impact.. Volume growth reports since late June 2020 years by almost half a million barrels, which supposedly made up for some of the fall during the spring months, not stable.
On the other hand, we witness the bankruptcy of the largest and oldest American company Chesapeake Energy, pressured by deep crises, resulting from the widespread spread of the coronavirus pandemic and the related drop in demand, oil prices and deterioration in shale oil and gas production in the United States. Guarantee that, that following the bankruptcy of the pioneer of the oil shale industry, other companies will not go bankrupt, no, as current prices are inconvenient for a significant portion of American shale oil workers. In any case, the bankruptcy of large players cannot contribute to an increase in oil prices ", – the expert added.
Chesapeake Energy, well-known in the United States, has registered with the American National Securities Commission a total net loss of $8,3 billion in the first quarter 2020 of the year, and its debt obligations additionally amounted to $3,9 billion. American and international experts call this outcome of Chesapeake Energy's activities a small visible part of a large iceberg.. Shale oil, due to the high cost of its production, does not withstand competition on world markets.
According to analysts of stock exchanges, during the auction, Brent crude oil rose in price by 2,7%, ie until $42,3 per barrel. WTI grade oil products increased in price by 2,8%, reaching the mark in $40,4 per barrel, while the cost of Urals oil added 1,88% and grew to $42,6 per barrel.
Raw materials of the Urals brand, believed in the expert community, has risen in price amid a decrease in supplies due to a decrease in production by the Russian Federation in the framework of the latest OPEC + deal. In July 2020 of the year, suggested by the Argus agency, Urals shipments may fall by more than 40%. At the same time, Urals sea exports next month are also expected to decrease by 534 thousand barrels per day relative to June 2020 of the year, namely before 770 thousand barrels per day, what will be the minimum volume in the history of monitoring since 2002 of the year. Total oil exports from the Russian Federation through seaports, reported earlier in Transneft, in July 2020 years may fall by 22%.
“There are many factors influencing the price of oil., which can constantly change. Oil price is a volatile indicator, reflecting dependence on various aspects, events in the world. At the moment, speculators are reacting to news of China's negotiations with the United States of America, on the development of a trade deal between them. Earlier certain influence was made by the speech of Trump's adviser, and later - a refutation of his words. The announcements about the continuation of trade cooperation between the Chinese and the American sides pushed prices up ", – expert says.
Recall, after his statement, US President Donald Trump's adviser on trade Peter Navarro clarified, that his words about the alleged decision of the American leader to end the trade deal with China were taken out of context, after the American leader himself refuted this information.
Six months ahead: what will happen to the oil market
While the American side is considering ways to influence China after being accused of involvement in the spread of the coronavirus, in Beijing, they are actively buying raw materials that have fallen in price on the market, including Urals. On the part of the United States, there is also an increase in interest in the Russian grade of oil - Washington began looking for an alternative to sources from Venezuela after the imposition of sanctions and settled on Russian Urals.
“The capitalist international community has free financial resources, despite the developing crisis, they are partially invested in oil, as there are not so many reliable assets. This and much more can affect prices..
If we talk about long-term prospects, eg, looking six months ahead, it's worth mentioning, that, first of all, the cost of oil will depend on the processes of economic recovery, which may slow down due to the strengthening of restrictive measures by the governments of different countries in the event of the onset of the second wave of the coronavirus pandemic ", – says expert.
Strengthening constraints, which were introduced earlier, could lead to a new price war in the international oil market and, Consequently, a sharp drop in the cost of energy. The absence of a second wave will indicate an imminent recovery in oil demand and an increase in prices.
The Russian Federation will be able to maintain its position in the market thanks to the actions of other major oil producers in the world as part of the recent OPEC + deal.
"The cost of oil compared to the spring, when the price of the Urals brand reached $8 per barrel, is at a normal level. This was facilitated by the OPEC + deal, in connection with which we made large reductions. First results of the deal, summed up by the head of the Ministry of Energy Alexander Novak, show, that the Russian side has fulfilled the agreement on production cuts for 89%. Upon reaching 100% Russian authorities, likely, decide not to further reduce production volumes - in this case, the cost of oil will slightly decrease. However, in any case, the further fate of the OPEC + deal will be known at the end of the summer period.. And today you need to watch the coronavirus, quarantine measures and reports on the state of American production ", – he concluded.
Alexander Melnik
