Cheaper oil, despite the agreement on a record decline

Oil benchmark Brent crude shortly after the opening of trading on the London stock exchange began to fall, despite OPEC+ eve agreed to record the reduction of oil production in the next two years.

As indicative information on the course of trading, in the course of the day the cost of the June futures fell almost $1 – from $31,48 per barrel to $30,63.

After the fall of the quotation have started to grow and at the time of writing the news, a barrel of Brent oil with delivery in June traded at $32 (approximately 1.7% higher than at the close of the previous trading day).

As noted by Reuters, market participants fear that the decline will not be enough to cover the drop in demand for hydrocarbons because of the global economic crisis, pandemic coronavirus. OPEC+ claimthat oil production will decline by about 20 million barrels per day, while oil demand fell by about 30% (about 30 million barrels per day).

Us banks Goldman Sachs and UBS last week predicted that oil prices continue to fall in price up to $20 per barrel.

An agreement to reduce the level of global oil production OPEC+ announced April 10. The agreement was reached a month after the termination of the previous transaction that triggered a record drop in the price of raw materials. By 9 March the price of Brent crude oil has fallen by 30% – up to $33 per barrel, the biggest daily drop since 1991, when the war began in the Persian Gulf. On 30 March the price of Brent crude fell below $23 a barrel.

On the background of unsuccessful negotiations Saudi Arabia, Vinitsa in the failure of the deal Russia has decided “to join total price war” and increase production from 9 million to 12 million barrels per day. In addition, Riyadh has pushed Russian oil Urals on the European market, offering triple the supply of Arab Light grade with big discounts. This led to the fact that, as of 31 March, the price of Urals dropped to the lowest level since 1999 – $13 per barrel. As noted by “Radio Liberty”, the Urals in Europe became cheaper fuel.

1 APR prices on the oil market began to rise amid expectationsthat Russia and Saudi Arabia will reduce production volumes. On 2 April President of the United States Donald trump announced a preliminary agreement largest oil producers to reduce production by 10-15 million barrels per day. Against this background, the Brent oil prices rose by 16.3% to us $of 34.83 per barrel.

However, the negotiations stalled because of a public squabble between the authorities of Russia and Saudi Arabia about the reasons for the dissolution of the agreement OPEC+. So, Russian President Vladimir Putin expressed the view that Riyadh is out of the transaction to eliminate competitors who produce shale oil. The Minister of foreign Affairs of the Kingdom, Prince Faisal bin Farhan al Saud has called the President’s words “completely devoid of truth”.

The negotiations were complicated by the position of Mexico, which refused to cut production at the proposed 400 thousand barrels per day. In the end, Mexico will reduce production at 100 thousand barrels, a decrease by 250 thousand barrels instead of Mexico will provide the US, although the antitrust laws of the States expressly forbids us companies to engage in cartels involved in price regulation.

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