Oil: a new chapter of the fall
On Tuesday, oil prices drop during European session, as supply disruptions in Canada and Africa is going to finish soon.
On Monday, the government of Canada increased the order volume for campus workers and some additional oil facilities, as the work was suspended due to extensive forest fires which were of serious hazard to oil production center of the country. It is the important measure for companies, which are looking to resume production.
Meanwhile, the Eastern Libyan port of Marsa El-Hariga resumed work over the weekend, and the state oil company reported about sending 660000 barrels after the suspension of exports due to a dispute between competing houses, struggling for power in the country.
The price of oil was supported markedly during the past weeks, thanks to a combination of supply disruptions from Nigeria, Libya and Venezuela, to a decline in shale oil production in the USA and an oil production reduction in Canada due to forest fires in the oil sand area.
However, some interruptions have ceased, and the traders are again focusing to the growth of world oil reserves.
Meanwhile, according to media reports, Iran plans to increase oil exports up to 2.2 million barrels by summer and has no plans to freeze the oil production level at the next OPEC meeting. This fact puts additional pressure on quotes.
On Friday evening, Baker Hughes, the supplier of oilfield services, reported that the number of drilling rigs in the USA remained at 318 last week, though it was decreasing for 8 weeks in a row.
Traders focused their attention on the fresh weekly data on oil and oil products reserves in the US. The American Petroleum Institute plans to publish the supply report today, while government data is expected on Wednesday and might show a decline in oil reserves by 2.5 million barrels within the past week, that finished on May 20.
However, it is worth to take into account the news from OPEC members: Minister of oil of Qatar and the President of OPEC states that the oil market is slowly recovering after a sharp fall over the past two years, though oil is still not trading at a "fair price", which could stimulate the necessary investments.
According to him, $65 per barrel is the minimal price that "is extremely necessary at the moment”. He also believes that the investment decline caused by price slump endangers future supplies.
Today the President of OPEC gave an interview to the AssociatedPress agency in Doha, the capital of Qatar. OPEC, the organization consisting of 13 oil producers, is preparing for the meeting in Vienna next week. The Minister of oil of Qatar leaves open the possibility to restart debate on the freeze in production volume of major producers, though the negotiations failed last month.
At 08:01 GMT, NYMEX Brent crude oil for June delivery falls by 51 cents (or 0.85%) up to $47.84 per barrel. A day earlier the Brent futures, traded at the London exchange, lost 37 cents (0.76%). Brent prices increased almost by 85% since the slump below $30 per barrel in mid-February, despite the Doha negotiations failure in April, which were aimed at agreement on freeze in production between OPEC and non-OPEC members. OPEC members meet in Vienna on June 2 and could re-discuss the initiative.
NYMEX WTI crude oil for June delivery was decreased by 23 cents (0.6%) up to $47,85 per barrel. On Monday oil futures, traded in New York, lost 33 cents, or 0.68%.
Oil prices increased on NYMEX by almost 80%, since the price collapsed on February 11 up to 13-year minimum of $26.05, which was followed by falling production of shale oil in the US. However, if we take into account the current prices, which are economically advantageous for some companies, the number of drilling rigs may grow again in the near future, and the decline in U.S. production may slow down.