On Tuesday, June 2, world oil prices are steadily rising during global trading. In the morning, the cost of raw materials of the Brent reference brand on the ICE exchange in London grew by 2.5% - up to $ 39.3 per barrel. Quotes of the American grade WTI added 2.3% and reached $ 36.2 per barrel. Values are highest since March 11th.
According to analysts, energy raw materials are getting more expensive ahead of the OPEC + meeting. Initially, a meeting of countries - oil exporters was scheduled for June 9-10. However, the parties to the transaction are considering the possibility of negotiating earlier - June 4, writes TASS, citing sources.
Recall that in May and June, in order to combat the global oversupply of the country's raw materials, the OPEC + participants in the transaction reduce hydrocarbon production by 9.7 million barrels per day. According to the agreements reached, from July to the end of 2020, 7.7 million barrels per day will fall under the reduction of oil production, and from January 2021 to April 2022 - 5.8 million barrels per day. However, during the June meeting, states may agree to extend the current production conditions until the end of the year.
“If the initiative is supported by several parties to the deal to extend the maximum reduction in oil production by 9.7 million barrels per day by the end of the year, the cost of raw materials may continue to grow. The probable postponement of the OPEC + meeting from June 9 to 4 indicates that the member countries of the alliance are close to consensus on this issue, ”said Dmitry Babin, stock market expert at BCS Broker.
Note that in the framework of the transaction, the main volumes of reduction are in Russia and Saudi Arabia. Each of the two countries reduces energy production by 2.5 million barrels per day. Moreover, earlier in Riyadh they announced their intention to further reduce production by another 1 million barrels per day.
A decrease in hydrocarbon production occurs in several other countries - exporters of raw materials not participating in the OPEC + agreement. It is about the USA, Norway, Argentina and Canada.
According to the calculations of the International Energy Agency (IEA), thanks to the efforts of all countries that reduce production, in May the supply of oil on the world market should have decreased by 12 million barrels per day. According to the Russian Ministry of Energy, in the following months, the total volume of reduction in production by global hydrocarbon producers may reach 15-20 million barrels per day.
In addition, oil quotes respond positively to the gradual weakening of quarantine measures in a number of countries. According to the IEA, in May the number of people in the world living in conditions of restrictions fell to 2.8 billion compared with 4 billion in April.
“If in the coming months the world continues to soften quarantine measures, production starts, which means that oil consumption will increase,” explained Artyom Deev, head of the AMarkets analytical department, in a conversation with RT.
According to experts, in the near future, investors will closely monitor the pace of global economic recovery. As noted by Dmitry Babin, the fall in global GDP should slow down already in the III quarter, which may further support oil prices.
Meanwhile, if the economic recovery will be slower than expected due to a possible second wave of COVID-19, commodity quotes may return to levels of $ 15-30 per barrel, the analyst did not rule out.
“Moreover, another risk for all markets remains the threat of growing political tension between the US and China. If the parties aggravate the conflict, this will primarily hit commodity markets, as China is one of the largest consumers of raw materials, ”added Dmitry Babin.
However, experts do not expect such a development of events in the near future. Therefore, given the decline in production by the OPEC + member countries, in summer the price of oil may exceed the psychological mark of $ 40 per barrel.
“According to the baseline scenario, in June, the price of Brent oil will be in the range of $ 36–40, and quotes may move to the range of $ 40–45 by the end of the summer. At the same time, WTI will be traded at the level of $ 35-38 in the coming month, and by the end of summer prices will reach $ 38-42 per barrel, ”Dmitry Babin emphasized.