Oil falls for the fourth week, Moscow mocks Trump’s “mad spells”

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Oil falls for the fourth week, Moscow mocks Trump’s “mad spells”

Expectations of a decrease in demand for oil 10% (Getty)
Oil is falling for the fourth week, Moscow is mocking

London – The New Arab

March 20
                            2020

The price of a barrel of Brent crude futures rose two dollars to 30.47 dollars, and the price of a barrel rose by the same amountFor US light crude futures contracts to $ 27.22, according to Reuters data.Prices also received support from the United States’ plans to buy up to 30 million barrels of crude oil for emergency stocks by the end of June, while reports indicated that regulators in the nation’s largest oil producing state, Texas, had curbed production.
Market Analyst at CMC Markets, Margaret Yang said that “the sudden recovery of crude oil prices, last night, was mainly driven by a study by the United States of intervention in the oil market by increasing strategic reserves, while some oil production contracted.”

“The main issue is that global energy demand is falling sharply, as more countries are joining the closure club. The risk posed by Covid-19 to the overall economy may exceed anyone’s expectations and may continue for a long period of time,” she added. However, although Brent futures increased the price of their barrels by 14.4%, on Thursday, achieving the largest gain in one day since September 2019, they are heading towards recording the fourth weekly decline, today, Friday. US crude and Brent crude prices have tumbled nearly 40% in the past two weeks since talks between the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, collapsed, leading Saudi Arabia to boost production.
The Wall Street Journal quoted unnamed sources as saying that the Trump administration was considering a diplomatic push to urge Saudi Arabia to cut supplies and use a threat of sanctions against Russia to force it to cut production.

However, the Kremlin soon responded, considering that media reports that the United States is considering imposing sanctions on Russia to force it to cut oil production looks like a seasonal madness caused by the Corona virus. And he said: “There is no price war between Russia and Saudi Arabia, our relations are good and we do not believe that anyone should interfere, “he said, noting that”Russia has built up sufficient reserves, and has sufficient hedging … The low oil price situation is uncomfortable but not catastrophic. “Expect demand to drop 10%

And emerged today, Friday, “Vitol”, the largest oil trading company in the world, expected that the global demand for oil may decrease by more than 10% due to the isolation operations spread across Europe to combat the outbreak of the Corona virus, as well as by actions in the United States.

But Vitol’s chief of research, Giovanni Serio, said the decline would be much greater if the virus led to isolations in the United States, the world’s largest oil consumer.

Meanwhile, Goldman Sachs predicted in a research note, that the curb of major OPEC supply producers could push Brent crude prices in the second quarter to rise to $ 30 a barrel, while US measures to support the market are likely to boost prices in the near term.

Goldman Sachs said that while any US measures may support the oil market in the second half of the year, the reduction in supply will remain insufficient to offset a loss of demand of 8 million barrels per day, caused by slowing countries of economic activity to stem the spread of the Corona virus that caused the death Ten thousand people around the world.The bank said in a note issued yesterday, Thursday: “In the medium term, the impact of these policies will depend on their political applicability, taking into account the upcoming presidential elections.”

He added that the share of US production may increase by between 5 and 10 dollars, “Goldman Sachs” estimate of the price of West Texas Intermediate crude, which ranges between 40 and 45 dollars per barrel in 2021.

The bank added that while a return to the policies of the US administration of oil supplies in the 1970s and 1980s “helps to support prices in the third and fourth quarters above our expectation of Brent crude at $ 30 and $ 40, it simply replaces the artificial oil support policy of OPEC with another,” referring to an organization Petroleum Exporting Countries (OPEC), where Saudi Arabia is a key member.

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