the price of European varieties fell below $40 per barrel.
Expectations to limit oil production within the OPEC deal+ no longer support prices. On Thursday quotes of the European varieties have lost 5-7%, dropping below $40 per barrel. Fuel demand recovers with a weak pace, while some companies have the possibility to resume the extraction of shale oil at current price levels, besides worsen relations between the US and China. Therefore, as expected, in the near future quotes will not rise above this psychological level.
to Stay above $40 per barrel to the price of the European grades of oil was only for a week. According to Reuters, today the quotations of June futures for Brent oil dropped to $of 38.64 per barrel. To 18:00 prices were just above $38,8 per barrel, which is 7% below closing of environment. Back to the level below $40 per barrel, and quotes spot market. So, according to Reuters, the price of Russian Urals have reached $of 39.7 and 39.9 (depending on delivery region), North sea Brent fell to $38.5 per barrel. Compared to the previous day’s losses exceeded 5%.
the price of oil steadily grew throughout may, in fact doubling in price in a month. As a result, by the beginning of June the price of European varieties exceeded $40 per barrel at its peak it exceeded $43 per barrel. Expectations of extending the deal to limit production for another month (until the end of July) as well as recovery in fuel demand pushed prices up. However, after the conclusion of agreements within OPEC+ at the weekend the new incentives to the game to improve not appeared.
according to the economist “BCS Premier” Anton Pokatovich, the output of oil prices above $40 per barrel is mainly determined by investors ‘ expectations of balancing the oil market in the future second-third blocks. However, in his words, “the level of uncertainty is still very high, as balancing the oil market will depend on the pace of recovery in global demand for oil.” Earlier in the week, Goldman Sachs analysts said the possibility of a return of the prices to $35 per barrel in the near future. However, at the same time analysts at investment Bank revised its forecast for the whole year, raising the assessment from $35.6 to $40 per barrel.
the Chief analyst of PSB Ekaterina Krylova notes that “the market is recovering slowly and at the expense of supply reduction rather than a sudden rise in demand, as expected, especially given the driving season” and the removal of all kinds of restrictions. In addition, how to pay attention to analyst “BCS” Dmitry Babin, in yesterday’s report US Department of energy “reflected the growth of the U.S. oil reserves to a record 538 million barrels vs. the previous Maxim��mA 535,5 million barrels set in March 2017”.
As noted by Dmitry Babin, for many shale companies corridor $30-40 per barrel is “reasonable in terms of ensuring the necessary cash flow to continue business and service loans.”
So for the near future we can rather expect that the forecast of the American bankers. As noted by Anton Pokatovich, the current market optimism remains fragile and in the case of, for example, the new “aggravations in relations between the US and China, the appetite to purchase risk can be reduced, which will also deprive the oil price support.” According to him, in the next few weeks, the oil quotes will be in the range of $35-40 per barrel.
As predicted by Ekaterina Krylova, for a short period prices by the end of next week could stay $38-40 per barrel, “with the risk to go below with the deterioration of statistics and the absence of signals of a brighter recovery in oil demand”. Assessment of Mr Babin, the decline in oil prices by 10-20% from its June peaks “would be a normal correction.”
