Crude oil prices decreased after a sudden increase in the level of US oil stocks, which deepened the state of concern about weak demand and the continued abundance of oil supply in the markets, due to the rapid spread of the Corona pandemic, the closure of some economies in the world, and the decrease in fuel consumption.
Prices were affected relatively by the announcement by “OPEC +” that plans to ease production cuts restrictions will follow their normal path, according to the schedule set in advance from the beginning of the new year, which requires adding two million barrels per day to global supply.
Oil specialists and analysts told Al-Eqtisadiah that OPEC + producers will continue to closely follow market developments and evaluate the data in light of the expanded ministerial meeting in December, which will have the final word on the situation of oil supplies in the year. Next. “
The specialists explained that oil prices have decreased by 36 percent this year since the Corona virus caused the destruction of fuel demand, and many oil companies have had to postpone their plans to increase production and pump less oil after OPEC +, led by Saudi Arabia and Russia, agreed in Last April, about 10 percent of the world’s crude oil supplies were cut.
In this context, Goran Geras, assistant manager of ZAF Bank in Croatia, says, “The continued building of oil stocks has returned to strongly pressurize the market, prevent the recovery of prices and increase the uncertainty in light of the weakening of demand and the acceleration of new cases of the epidemic,” noting that the factors Bearishness overcame the market’s path after data from the American Petroleum Institute confirmed an increase in US crude stocks as well as an increase in oil production in Libya.
He pointed out that the declines dominated again after a short period of optimism about the American financial relief plans, explaining that the acceleration of stockpile building surprised market observers, as it was supposed to improve market fundamentals after the withdrawal of 5.4 million barrels of US oil stocks last week, but the pandemic situation Heavy pressure on fuel consumption with the return of movement restrictions and the direction of large and influential economies to return to lockdown to control the spread of infection.
For his part, Robert Stehrer, director of the Vienna International Institute for Economic Studies, believes that the problem of oversupply versus weak demand is still firmly dominant on the market and the gap between them is widening with the continued very rapid rate of new infections with the virus, pointing to mounting concerns about the supply glut due to reports that oil production Libyan crude and condensate has more than quadrupled in one month, reaching 500,000 barrels per day in October.
He added, “The recovery in Libyan production came at a precise time in which the market suffers severely from severe disruptions and uncertainty about the coming period as a result of the oversupply in the markets reeling due to the lack of demand, and tension in the market has escalated after OPEC + did not issue any signs of retreating from reducing cuts Production scheduled for January 1, 2021. “
Andrei Yaniyev, a Bulgarian analyst and researcher in energy affairs, says that “OPEC +” is natural to be slow in making any decision regarding the amendment of the cuts until the market developments are clear in November, especially since there is a ministerial meeting to monitor the production cut in November. (November) followed by an expanded ministerial meeting on the first of next December. “
He pointed out that the market is still optimistic that the “OPEC +” alliance will review the planned increase of about two million barrels per day at the beginning of next year, despite the absence of clear indications issued by the last meeting of the Joint Ministerial Monitoring Committee of “OPEC +” on 19 This October.
In turn, Dr. Naganda Commandantova, Senior Analyst for the International Institute for Energy Applications, confirms that swollen stocks are one of the main challenges facing the OPEC + producers’ alliance, and despite the group’s strict production restrictions and the increase in the compliance rate to 103 percent, this October and the contraction of US competing production remains a case. An oversupply is broadly dominating the market.
She stated that the market’s attention is now focused on the vast and rapid increases in Libyan production supplies, which are exempt from all restrictions on reducing production due to the civil war and frequent interruptions, but these increases coincide with the survival of global demand at one of its weakest states with the retreat of previous hopes for a quick recovery, which expanded Of the pressures and burdens on crude oil prices, which are struggling to stay at safe levels to protect producers’ budgets and ensure the continuity of investments, indicating the market’s confidence that OPEC’s interventions are timely and in the interest of all parties and to strengthen the global economy.
On the other hand, with regard to prices, oil prices fell yesterday, after a sudden increase in US crude inventories fueled fears of a global supply glut, and the rise in cases of Covid-19 exacerbated concerns about the slowdown in the recovery of demand for fuel.
Brent crude futures closed at $ 41.73 a barrel, down $ 1.43, or 3.3 percent, as of 12:48 pm yesterday.
US West Texas Intermediate crude futures were down $ 1.67, or 4 percent, to $ 40.03, and both benchmarks rose in the previous session.
Last Tuesday, data from the American Petroleum Institute showed that crude oil inventories in the United States increased by 584 thousand barrels in the week ending October 16, to reach 490.6 million barrels, while analysts in a Reuters poll expected a decrease of 1 million barrel.
And the pressure increased by exceeding 40 million cases of HIV infection around the world yesterday, with the renewal of general isolation measures in some areas in Europe.
On the supply side, the Russian Energy Minister said, “It is too early to discuss the future of global oil production after December, less than a week after announcing that plans to ease the current production restrictions should go ahead.”
On the other hand, the OPEC basket of crude fell, recording 41.04 dollars a barrel yesterday, compared to 41.38 dollars a barrel the previous day. The daily report of the Organization of Petroleum Exporting Countries OPEC said yesterday, “The price of the basket, which includes the average prices of 13 crude produced by the member states of the Organization, achieved the first decline after several previous rises, and that the basket gained about one dollar compared to the same day last week, which was recorded.” It has $ 40.68 a barrel. “
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