Trading data on Thursday morning showed that global oil prices fell by 2%. Investors are taking profits after the growth of quotes by almost 4% and continue to actively monitor the situation with the counting of votes in the US presidential election.
Thus, the price of January futures for the North Sea Brent oil mixture fell 1.99% and is now $40.41. December futures for WTI crude oil lost 2.02% and reached $38.36 per barrel.
On Wednesday, oil quotes rose within 4% against the background of news from the US. Official sources said that the commercial reserves of black gold in the country decreased by 8 million barrels from October 23 to 30, while earlier analysts had predicted an increase of 0.9 million.
According to the US Department of Energy, production in the country for the reporting period averaged about 10.5 million barrels, a decrease of 600,000 barrels per day. Meanwhile, gasoline inventories increased by 1,541 thousand barrels and amounted to 227.665 million barrels. Commercial stocks of distillates fell by 1,584 thousand barrels, reaching 154.644 million barrels. At the same time, experts interviewed earlier expected a decrease in gasoline reserves by 800 thousand barrels and a decrease in distillate stocks by 2500 thousand barrels.
If we turn to the dynamics of oil production since the beginning of the year, in January it averaged 12.755 million barrels per day, in February - 12.746 million, in March - 12.737 million, in April - 12.01 million, in May - 10.019 million, in June - 10.446 million, and in July - 10.984 million barrels per day. Last year, the average oil production hovered around 12.248 million barrels per day. The exact data is reported in monthly reports two months apart. According to preliminary data, the production of black gold in August amounted to 10.87 million barrels per day, and in September - 11.22 million barrels. The exact data for August will be announced at the end of October.
The focus of the markets today is undoubtedly on the US presidential elections. According to preliminary estimates, Democratic candidate Joe Biden is in the lead. Despite this, the incumbent Republican President Donald Trump announced his victory on Wednesday night and accused the Democrats of trying to "steal the elections." In addition, Trump threatened several states with lawsuits and said that he would demand a recount in Wisconsin, where Joe Biden won.
At the moment, the final results of the voting in a number of states are still unknown, but Trump's opponent is increasingly confidently approaching victory. According to the latest data, the Democratic candidate is ahead of the incumbent with 264 electoral college votes out of the required 270, with Trump's 214 votes. At the same time, Republicans are likely to retain control of the Senate, which will become a serious obstacle to large-scale measures to combat the consequences of the COVID-19 pandemic.
Earlier, experts said that Donald Trump's victory would be more optimistic for the oil market since OPEC + will be able to reduce black gold production without fears that Iranian oil will take a significant place in the market in the near future.
This uncertainty surrounding the US elections is making many large investors nervous. In this regard, the next few weeks may become very turbulent and volatile for participants in the raw materials markets.
The news about a decrease in demand in Europe adds fuel to the fire of already negative sentiments. For example, the average use of highways in Italy, Spain, and France broke the record for the lowest level since the end of June.
However, OPEC + is trying to take the most effective measures to prevent a crisis in the commodity market. Thus, Algeria, which is the chairman of the aforementioned organization this year, announced that, together with Russia, Iraq, and Saudi Arabia, it is trying to persuade other OPEC + members to extend the current cuts in oil production.
At a meeting of the Finance and Budget Committee of the National People's Assembly, Algerian Energy Minister Abdelmadjid Attar proposed extending the agreement for the first quarter of next year.
Recall that the OPEC + countries in April 2020 agreed on a record reduction in oil production amid an uncontrolled drop in oil demand amid the coronavirus pandemic. According to the agreement, the volume of oil production should be reduced by 9.7 million barrels per day in May-June 2020 (later these restrictions were extended to July), and from August to December - by 7.7 million barrels per day. From early 2021 to May 2022, production is expected to decrease by 5.8 million barrels per day.
The possibility of an additional revision of the volume of oil production cuts is being considered against the backdrop of an increase in the number of COVID-19 cases and the subsequent tough quarantine measures in Europe, which may further limit oil demand.
