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03.07.202015:30 Oil shows a negative correction: pressure from COVID-19 continues

Exchange Rates 03.07.2020 analysis

The price of crude oil turned to negative dynamics this morning, which is primarily due to the level of demand for black gold, which could suffer significantly due to the increase in the number of people infected with coronavirus infection in the United States and the world as a whole. The pandemic is increasing its pace, so investors have justifiable concerns about continued demand for raw materials. Therefore, reintroduction of quarantine restrictive measures will be likely.

The number of cases of COVID-19 in America is growing rapidly. There are now already 50 thousand more. What's particularly dangerous is the fact that cases of infection are detected again in fairly densely populated states located in the south of the country. They are the largest consumers of crude oil in the country. Of course, new outbreaks will seriously affect the level of demand, and the introduction of quarantine can completely undermine it completely.

It becomes clear that the black gold market is still playing a very strong role in the incidence of coronavirus infection. This is perhaps one of the most significant factors in pressure on oil. The cost of crude oil is very negative about the potential risk of a new quarantine, which could be disastrous for it.

According to statistics provided by Baker Hughes, the number of operating oil producing stations in the United States of America has declined again a little earlier than usual. The total number decreased by three units in the previous week. Now, there are only 185 operating plants for the extraction of raw materials. It can be recalled that their number was much larger - 788 units over the same period last year. Of course, such news supported the market a little, but this support was not enough for the positive dynamics of the price.

The good news for the oil market has come from OPEC. As it became known, the organization reduced the export of oil by 1.84 million barrels per day in the first month of summer. Thus, the total volume of exports in the member countries of the organization was at the level of 17.2 million barrels per day. At the same time, Saudi Arabia managed to achieve the largest indicators for reducing exports: the decline amounted to 979 thousand barrels per day.

Another state that is not a member of OPEC has also announced a decline in the supply of raw materials to the world market. This country has become Oman, which plans to reduce exports by 161 thousand barrels per day. The total volume of oil exported by him to the market is not too large - only 1%, but this decline has already pleased investors. Oman has fully complied with its obligations to reduce oil production.

Even earlier, the UAE also warned its direct customers that it was reducing its supply by about 5% in August this year. At the same time, all grades of oil raw materials that are extracted on the territory of the state will be reduced.

The price of Brent crude oil futures for delivery in September declined by 1.11%, or 0.46 dollars on a trading floor in London this morning, which pushed them to the mark of 42.66 dollars per barrel. It can be noted that yesterday's trading ended with a growth of 2.6%, or 1.11 dollars, and the closing price was at the level of 43.14 dollars per barrel. So far, the decline, of course, has not allowed to lose all the advantage gained, but there is still a whole trading day ahead of the weekend.

The price of WTI crude oil futures for delivery in August on a trading floor in New York also underwent a negative correction. The morning drop was already 1.11%, or 0.45 dollars. Thus, its value declined to the level of $ 40.20 per barrel, but has not yet stepped over the strategically important line of $ 40 per barrel. At the close of yesterday's trading, the oil brand climbed 2.1%, or 0.83 dollars, and the price stopped at 40.65 dollars per barrel.

Today, trading on the NYMEX site does not take place, since it is a holiday in the United States of America.

Performed by Maria Shablon,
Analytical expert
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