This morning, oil prices continued to rise. Participants continue to be enthusiastic about the news of the ever-increasing exemption from quarantine measures related to the COVID-19 pandemic. In addition, positive news is added about a further decline in oil production by OPEC countries.
The price of Brent oil futures for July delivery has become more expensive today - 1.89% on the London Stock Exchange, which is $ 0.67 in cash. Its current value is at the level of 36.20 dollars per barrel. It can be recalled that the increase was slightly less noticeable yesterday, around 0.4 dollars, or 1.1%.
WTI crude oil futures for July delivery on the New York E-Exchange are also on the rise. They increased in price immediately by 3.22% in the morning, which corresponds to 1.07 dollars, and took the level of 34.32 dollars per barrel. The last trading day was not held because America celebrated a national holiday. But last week's trading day reflected a decline in quotes of raw materials by 2%, or $ 0.67.
Now, there are quite a few determining factors that somehow put pressure on the oil market. So, the Japanese authorities announced yesterday that the country was emerging from a pandemic, which was marked by the abolition of the state of emergency and the gradual opening of borders. India is also on its way out of the pandemic and is resuming domestic flights. Just a week ago, European countries began an active return to their former life, which is only stepping up its pace today . Saudi Arabia has set a date on which the mitigation of quarantine measures will begin - May 28. Singapore is also going to unveil the next, fourth in a row, a set of incentive measures designed to support the country's economy.
According to analysts, the gradual and systematic opening of the economies of the world will find a very positive response at different levels, including the black gold market, which is already recording an increase in demand for oil raw materials.
The situation with Hong Kong, which began to unfold last week, added a serious negativity to the hydrocarbon market. A new round of conflict between the US and China began against the backdrop of the latter's announcement of its intention to ratify a bill protecting Hong Kong's national security. The American authorities were extremely dissatisfied with such intentions, which forced them to take countermeasures. However, so far the main points on the content of the bill remain unknown, which somewhat relieves the general tension, which, however, is ready to resume at any moment.
The oil market is supported by the expectation that the world's major oil producers (OPEC countries) will continue to reduce production, which is their obligation to fulfill the agreement signed earlier. The decline in production will make the recovery process for the oil market faster.
In this regard, there was a reduction in oil production this month in accordance with the agreement between the OPEC countries. Experts estimate a decline in production in the region of 8.63 million barrels per day, which is slightly more than the planned 8.5 million barrels per day. Of course, this cannot but inspire market participants, because hopes for recovery are reinforced by real actions.
At the same time, the next meeting of the world's major oil producers is due to take place on June 10. Perhaps, we will get in the course of it a new batch of positive for the market. At the very least, OPEC members are deeply prepared for new measures designed to support the hydrocarbon market, which so far cannot even return to its annual levels. So, Saudi Arabia, the UAE and Kuwait have now announced that they can further reduce their production by about 1.2 million barrels per day, and this will be done in addition to the reduction indicated in the agreement.
Nevertheless, some experts regard the current rise in prices in the oil market as a temporary trend. Analysts believe that there are not enough factors so far for a stable and continued growth in the price of black gold. Further recovery will be limited by the way out of the global economy from the recession that has developed against the backdrop of the coronavirus pandemic. Relations between Beijing and Washington are also worsening the situation, which, apparently, will not work out in the near future. If the president of America takes extreme measures and begins to impose tough new sanctions on China, the global economic upturn will slow down, therefore, oil demand will also go downward, which will affect its value. As long as there are similar risks in the market, the price of black gold will be very limited in growth.
Meanwhile, the short-term trend will still be associated with a reduction in the cost of crude oil. According to expert analysis, this situation will last until approximately July of this year. The situation will change in the second half of this year, so that oil will grow in the long run. However, all this will be possible only if general macroeconomic data are improved for the world as a whole and for individual countries in particular.
