Will oil prices rise after production cuts? .. Barclays responds



Agencies Al Ain News
Russia’s production of oil and gas condensate decreased to about 9.43 million barrels per day from May 1 to the fourteenth of it with the entry into force of a global agreement to reduce production, according to Reuters quoted informed sources.

This comes down from 11.35 million bpd last April and 9.45 million bpd from May 1 to 11 of the same month.

The Energy Ministry has not yet responded to a Reuters request for comment. Russia is cutting production as part of a global oil deal reached last month, which entered into force on May 1.

Last month, OPEC and its allies agreed, in the context of what is known as the OPEC + group, to cut production by 9.7 million barrels per day in May and June, which is a record production cut.

Producers will slowly loosen restrictions after next June, but supply cuts will remain in place until April 2022. The next OPEC + meeting will be in early June to decide on its production policy.

Barclays raises its forecast for oil prices

Barclays Commodities Research had raised its oil price forecast for the current year and next, with support from supply cuts to offset demand erosion caused by restrictions aimed at fighting the spread of the Corona virus.

In recent days, several OPEC countries, including Saudi Arabia, the United Arab Emirates and Kuwait, have said they will cut production more than they originally promised. In the United States and Canada, producers cut 1.7 million barrels per day, which is faster than expected.

The bank raised its forecast for Brent and West Texas Intermediate futures contracts by between $ 5 and $ 6 a barrel for 2020 and $ 16 a barrel for 2021.

US crude prices tumbled to minus $ 40 last month due to storage problems at the Cushing warehouse in Oklahoma.

In the very short term, Barclays said, prices are likely to remain under pressure as the uncertainty surrounding the speed of the economic recovery remains high.

Standard crude prices are expected to average $ 28 in the second quarter, before rising to $ 39 in the fourth quarter.

American crude is expected to reach $ 21 in the current quarter and to rise to $ 36 in the fourth quarter of the year.

Oil prices rose on Friday after data showed a rise in demand for crude in China, which strengthens hopes that the global surplus may begin to decline. Brent traded at $ 32.40 a barrel and West Texas Intermediate crude $ 28.52 a barrel.

Barclays now expects Brent to average $ 37 a barrel and West Texas Intermediate at $ 33 this year. For 2021, the bank expects the average price of Brent and West Texas Intermediate to be $ 53 and $ 50 per barrel, respectively.

The bank said that while the demand for fuel continues to recover, it is unlikely that the variables of supply and demand in the Cushing oil storage center will deteriorate significantly, despite the possible recovery of some production interruptions over the coming weeks, adding that he does not expect crude prices to go Central West Texas to negative territory again.


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