Oil Prices Climb on Favourable Outlook, Over $63 Per Barrel

Oil Prices Climb on Favourable Outlook, Over $63 Per Barrel

Prices for “black gold” benchmark marks are rising during today’s trading on the back of a slight increase in traders’ optimism about the outlook for demand due to strong statistics from China.

As of 8:20 Moscow time, June futures for North Sea Brent crude oil rose by $ 0.21 to $ 63.49 per barrel, May futures for West Texas WTI grade – by $ 0.19 to $ 59.89 per barrel, Finmarket reports. …

As the analyst of IAC Alpari Vladislav Antonov notes, yesterday “trading in oil ended in growth”. “Brent crude rose 0.22% to $ 63.15. In the European session, the price rose to $ 64.27. Several factors contributed to the recovery in oil prices: the lifting of restrictions in England, the acceleration of vaccinations in the EU, as well as the attack on the Saudi Aramco oil facilities in Saudi Arabia, ”the expert said in his review.

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He states that “from April 12, shops, hairdressing salons and gyms began to work in England.” “Also, the optimism in the market was caused by the acceleration of vaccination in France, Germany and Italy,” Antonov emphasizes.

Meanwhile, he points out, “the Iranian-backed Yemeni Houthi movement has said it has fired 17 unmanned aerial vehicles and two ballistic missiles at Saudi Arabia targets, including the Saudi Aramco refineries in Jubail and Jeddah.”

In general, the analyst believes, “after the evening correction today, buyers are making a second attempt to develop an upward movement to overcome the level of $ 64.25 per barrel of Brent”. “Growth is hindered by the rising dollar amid rising yields on US bonds. If the profitability does not decrease in Europe, the oil price will continue to move sideways, ”the expert sums up.

Let us also recall that at the end of the first quarter of 2020, several waves of falling prices for “black gold” swept across the world oil market. The negative situation was caused by a whole range of factors: a general overproduction of raw materials, a sharp drop in demand amid the rapid spread of the coronavirus infection COVID-19 (a pandemic was announced on March 11) and concerns about its impact on the global economy, as well as the collapse of the OPEC + deal (officially from April 1, but in fact after fruitless negotiations between the oil-producing countries at a meeting on March 6 in Vienna).

However, on April 12, the OPEC + countries agreed on a new deal, in which 23 states became participants. The agreement is designed for 2 years – from May 1, 2020 to May 1, 2022. The new OPEC + deal was a forced reaction of oil-producing countries to the market situation and pressure from the United States. However, in general, it did not cover the decline in global demand; moreover, huge reserves of raw materials have accumulated on the market.

During 2020, the OPEC + countries held meetings, adjusting the parameters of the transaction taking into account the situation on the global oil market – starting in May to reduce oil production by 9.7 million barrels per day, in August they relaxed the restrictions to 7.7 million for the period until the end 2020.

On January 4-5, 2021, the ministers of the OPEC + countries made a compromise decision, according to which, starting from February, Saudi Arabia will voluntarily reduce oil production by almost 1 million barrels per day within two months, to about 8.125 million barrels per day, and a few more OPEC member countries will cut production by two months by a total of 425 thousand barrels per day. At the same time, Russia and Kazakhstan got the opportunity to increase production in February and March.

On March 4, following a regular meeting, the OPEC + participants unexpectedly decided to maintain the current level of oil production for all countries of the alliance, except for Russia and Kazakhstan, which will be able to increase production by 130 thousand and 20 thousand barrels per day from April, respectively.

On April 1, the OPEC + countries agreed to gradually increase oil production: in May and June – by 350 thousand barrels per day, and in July – by 400 thousand barrels per day.

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