On Wednesday, June 3, trading in the global energy market was accompanied by an increase in world oil prices. At the beginning of the day, the cost of raw materials of the Brent reference brand on the ICE exchange in London rose by 2.4% - to $ 40.5 per barrel. Quotes of the American grade WTI added 3.7% and reached $ 38.2 per barrel. Values are highest since March 6th. In the afternoon, the indicators slightly adjusted, but at the same time they still remain near the maximum levels for the last three months.
According to experts, oil prices are rising for the sixth week in a row and have already offset a significant part of the spring collapse. The observed dynamics of the analysts are primarily explained by the operation of the OPEC + agreement.
Recall that from May 1, the countries participating in the transaction renewed their partnership and agreed to reduce oil production by 9.7 million barrels per day until the end of June to combat the global oversupply of raw materials. According to the terms of the agreement reached earlier, from July to the end of 2020, 7.7 million barrels per day will fall under production cuts, and from January 2021 to April 2022, 5.8 million barrels per day. However, the parameters of the contract may be revised in the coming days.
The next OPEC + meeting was scheduled for June 9-10, however, the parties to the transaction are considering negotiating earlier - June 4. Moreover, in the framework of the discussion of the country, exporters of raw materials can extend the current terms of the transaction after June.
“At the moment, market participants expect that a record reduction in oil production - by 9.7 million barrels per day - will be extended until the end of summer. Thus, investors expect a decrease in the global supply of raw materials, which plays in favor of an increase in oil prices, ”Igor Galaktionov, stock market expert at BCS Broker, told RT.
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.
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A decrease in hydrocarbon production occurs in several other countries - exporters of raw materials not participating in the OPEC + agreement. We are talking about the United States, Norway, Argentina and Canada.
At the same time, the most active drop in oil production is observed in the USA. About this RT told the deputy head of the information and analytical center "Alpari" Natalia Milchakova. According to her, the recent collapse in oil prices has led to losses for oil shale companies, which are forced to suspend operations on a massive scale. As a result, to date, drilling activity in the country has weakened to a minimum for the entire time of official observations - since the 1940s.
“Oil supply in a number of countries is declining due to natural reasons, primarily in the USA. In April and May, many shale oil producers in the United States have already filed for bankruptcy. Against this background, by the end of 2020, oil production in the country may be reduced by 3 or 4 million barrels per day, ”Milchakova explained.
In general, according to estimates by the International Energy Agency (IEA), 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.
Oil quotes also respond positively to the gradual weakening of quarantine measures in a number of countries. According to the IEA, around the world the number of people living in restricted conditions fell in May to 2.8 billion, compared with 4 billion in April.
“The coronavirus pandemic is gradually receding in many countries. Quarantine restrictions for economies are removed, which helps restore demand for oil, ”added Milchakova.
According to experts interviewed by RT, the threat of rising political tension between the US and China remains a deterrent to oil prices. The aggravation of the conflict risks hitting commodity markets, since China is one of the largest consumers of raw materials.
However, experts do not expect such a development in the near future. Against this background, according to Natalia Milchakova, in a few days the price of oil may rise to $ 44 per barrel. By the end of the year, quotes may gain a foothold in the range of $ 42–47 per barrel, Igor Galaktionov believes.
The record growth in oil prices in recent months has positively affected the dynamics of the Russian currency. So, at Wednesday's trading, the dollar exchange rate on the Moscow Exchange decreased by 0.75% to 68.2 rubles, and the euro exchange rate - by 0.3%, to 76.5 rubles. The last time similar indicators could be observed on March 6.
“As expected, a recovery in oil prices could mitigate the negative effects of the coronavirus pandemic on the Russian economy. Against this background, until the end of June, the dollar will remain within the corridor of 68-73 rubles, the euro - near 76-80 rubles, ”concluded Milchakova.