A slight rise in oil after the approval of America and Russia to hold talks

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A slight increase in oil after the approval of America and Russia to hold talks, today, Wednesday, April 1, 2020 05:30 AM

Oil recovered slightly Tuesday, after US President Donald Trump and his Russian counterpart, Vladimir Putin, agreed to hold talks to stabilize energy markets, rising from the lowest level in 18 years, which was due to lower expectations of the new Corona virus epidemic of demand for fuel in around the world.

Brent global benchmark crude increased 30 cents, or 1.3 percent, to $ 23.06 a barrel by 0635 GMT, after recording at Monday’s close of $ 22.76, the lowest level since November 2002.

US crude rose $ 1.21, or 6 percent, to $ 21.30 a barrel, after reaching $ 20.09 at the previous session, when it was the lowest level since February 2002.

Oil markets faced simultaneous pressures from the outbreak of the epidemic and from a price war that flared after Russia withdrew from the OPEC Plus agreement.

The Kremlin said yesterday that Russian President Vladimir Putin and his US counterpart Donald Trump agreed during a phone call on Monday that the current situation in the global oil markets is not appropriate for either country.

The Kremlin said on Monday that Trump and Putin agreed during the call that senior energy officials of the two countries hold discussions on stabilizing global oil markets.

Kremlin spokesman Dmitry Peskov said: “There is no doubt … there is an understanding that the current situation in the oil market is not in the interest of our two countries.”

Oil refineries around the world also reduced production rates due to the sharp decline in demand for fuel used in transportation, and sources told «Reuters» that European refineries reduced production by at least 1.3 million barrels per day.

A Reuters poll yesterday concluded that oil prices will remain below $ 40 a barrel this year, as measures to stop the high-speed global spread of the Corona virus are undermining demand, while the collapse of the OPEC + agreement is exacerbating an ever-increasing supply glut.

The survey of forty analysts expects Brent crude prices to average $ 38.76 a barrel in 2020, down 36 percent from expectations at $ 60.63 in a poll conducted in February.

The West Texas Intermediate crude projection of 2020 was lowered to $ 35.29 a barrel from last month’s forecast of $ 55.75.

Both Brent and West Texas Intermediate crude oil prices are currently trading in a range of just under twenty dollars.

Brent crude fell globally by nearly 70 per cent from highs reached in January, as global isolation measures caused by the virus damaged demand, while price warfare flooded the market with supplies.

Analysts expect global demand to shrink by between 0.7 million and five million barrels per day in 2020, which is likely to exceed the decline in 2009 during the global financial crisis.

The poll showed that American production may drop by between 0.5 million and three million barrels per day.

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