Oil: the main tendencies of the beginning of May.
The first half of May was questionable for both oil grades: both of them had faced a slight fall and a noticeable growth. Currently the situation is the same: Brent Crude oil has decreased up to $44 per barrel at the beginning of the week, and then strengthen above the mentioned level.
Let us consider the rise and slump factors within the last 2 weeks.
First of all, we should mention the April meeting outcomes, which didn’t cause the production freezing at the January/February level of the current year. In fact, Saudi Arabia refused to process, as Iran hadn’t decreased production either. We remember that Iran is hardly trying to reach the 2014-year level of oil production and is quite near now. In fact, Iran may become a strong rival for Saudi Arabia, that set an OPEC current policy.
Saudi Arabia states the increase in demand for oil. The Saudi Aramco head mentioned that the demand for the company’s oil is growing in India and the USA. According to the forecast, the global oil demand may increase by 1,2 million barrel per day this year.
The head of the company also reports that the inner oil demand will be followed by the fuel consumption increase during the Saudi Arabia’s hot summer. According to him, the company’s average production was 10,2 million barrel per day in 2015.
Moreover, we should take into account the opinion of other OPEC members. The Minister of Industry and Energy of Qatar has a say that oil industry is on its way to recapture, though they do not expect it until the second half of 2016. Qatar, as well as Saudi Arabia, has a hard time due to the low oil prices: the key interest rate of both countries (Qatar and Saudi Arabia) has risen up to the highest levels during the last 3 years. Basically, it is proved by the fact of liquidity slump in both regions, due to oil price decline.
The American Petroleum Institute data on the US oil stock is in focus today. If the oil stock reaches the record level, it will influence the quotes, as investors may beware of the global oversupply.
Brent/WTI bench., H4
Technically, Brent has lost $2,5 and WTI is lower by approximately $1,8 within these 10 days. Currently, Brent Crude oil is traded around $44,41 per barrel, and WTI is approaching $43,83 per barrel.