Oil market sentiment improves faster than estimates..Recovery economies revive demand

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Crude oil prices started the week’s trading with new fluctuations, but they retreated from the highest level in two years, which they recorded at the end of last week, due to profit taking and price correction, in addition to the state of anticipation related to the negotiations of international powers in Vienna on the Iranian nuclear file.
Prices are receiving strong support from several factors, most notably the recovery in demand, the recovery of the tourism season and the summer driving, in addition to the decline in stocks. The boom in demand is due to the spread of Corona vaccines, along with strong economic data in the United States, China and Europe, with a complete end to the previous tight general closure.
He told Al-Eqtisadiah, specialists and oil analysts, “The market sentiment is improving well and at a pace that exceeds previous estimates as a result of the recovery in demand and the continuation of supply restrictions and caution in dealing with the wave of price hikes on the part of producers, whether in the “OPEC” group or outside it.”
They pointed out that “OPEC +” manages the market well in a way that enhances balance and ensures the continuity of price recovery, and helps it to continue the slowdown in US production due to addressing the effects of the epidemic crisis.
Specialists praised the assertion of Prince Abdulaziz bin Salman, Minister of Energy, at the St. Petersburg Forum, that there will always be a good amount of supply to meet demand, stressing the need for producers to see demand before they increase supply.
They promised that these statements confirm that “OPEC +” puts the market balance at the forefront of its concerns, which justifies the group’s current adherence to holding about six million barrels per day of crude oil.
The specialists pointed to the importance and impact of “OPEC” expectations this week that oil stocks will decrease rapidly starting from next August with the easing of the closures in the major economies and the recovery of travel, explaining that the rise in oil prices led to fears of accelerating inflation and to calls by consumers urging an alliance. OPEC + to boost production.
Robert Stehrer, director of the Vienna International Institute for Economic Studies, said, “The record price gains, which reached the highest level in two years, were caused by demand booms, which were also helped by the decline in drilling and production operations in the United States, as buyers demand more oil than producers pumped, which pushed crude prices.” Brent exceeded $72 a barrel at the end of last week.
He pointed out that the “OPEC +” alliance is gaining increasing strength due to the continuous understanding and coordination between Saudi Arabia and Russia and the influence of the group’s flexible production policies. After a period of record tightening of supply, the group returned to pumping gradual increases to keep pace with the recovery in demand and in harmony with the high consumption in the summer in particular, It is likely that these increases will continue in the subsequent months, with the successive elimination of the effects of the pandemic and the reduction of its exorbitant economic bill.
For his part, Alexander Bogle, a consultant at GBC Energy International, confirmed that the state of caution dominates the performance of all producers, specifically in the United States, as American oil will take a long time to return to the production levels that it was before the outbreak of the Corona virus, according to data Reliable international economics.
He stated that the prospects for the oil market are promising, and some are betting that it is on the cusp of a new wave of boom that compensates for the effects of economic crises and usually follows them, as international reports indicate that the Chinese economy will continue to grow at strong and ambitious rates, which helps boost demand for oil, which supports Turn the current trend of the continued reduction of crude oil stocks globally.
For his part, Rudolf Huber, a researcher in energy affairs and director of a specialized website, said, “The coming period will witness a growth in the refineries’ processing of more crude oil to keep pace with the rise in fuel consumption with the return of air traffic and travel, and in light of the intensity of movement on the roads in response to lifting movement restrictions in most countries. the world”.
He pointed out that the market obstacles at the current stage are focused on the continuation of the epidemic crisis in India and South Asian countries, in addition to the state of fear and anticipation in the market for the Vienna nuclear negotiations, amid signs that an agreement is imminent, which may be the beginning of the return of more Iranian crude oil to the markets this year. After a possible deal in exchange for the United States easing economic sanctions.
In turn, Naila Hengstler, Director of the Middle East Department at the Austrian Federal Chamber, confirmed that the recovery of Asian demand in general, led by China, pushed it to record record price rises, and expectations were issued by the Organization of the Petroleum Exporting Countries (OPEC) suggesting that global demand will severely exceed supply during the rest of the months of this year.
She indicated that Saudi Arabia is the most prominent source to Asian markets, as it relies on flexible policies in oil supplies and in selling prices, explaining that Saudi Arabia pumps more than 60 percent of its exports to Asia, specifically to China, India, South Korea and Japan, as they are the largest buyers, taking into account the crisis. The current trend of rising cases of mutated coronavirus and declining demand for fuel in India.
With regard to prices, oil fell yesterday, after hitting a two-year peak above $ 72, due to pressure caused by the possibility of an increase in Iran’s exports, but the recovery in demand and supply restrictions from “OPEC +” provided some support.
Demand is increasing in the United States and Europe with the easing of restrictions related to Covid-19, and India is also easing isolation measures in another step that may boost fuel consumption.
And adhered to “OPEC” and its allies agreed to production restrictions until July (July).
According to “Reuters”, Brent crude fell 62 cents, or 0.9 percent, to $71.27 after the opening of European markets, after hitting $72.27 earlier, the highest level since May 2019.
US West Texas Intermediate crude touched $70 for the first time since October 2018, but reversed the trend to trade down 66 cents, or 0.8 percent, to $69.07.
“With some improvement in pandemic conditions in India and recovery in the United States and China while Europe remains on track, there should be an appetite for crude buying with each drop,” said Jeffrey Halley, an analyst at brokerage Oanda.
Crude has risen over the past two weeks, and Brent has increased 37 percent since the beginning of the year thanks to supply restrictions imposed by “OPEC” and its allies, and demand partially recovering from the collapse caused by the pandemic.
Iran and world powers will start a fifth round of talks on June 10 in Vienna that may include the United States lifting economic sanctions on Iranian oil exports.
On the other hand, the “OPEC” crude basket rose, and its price reached $70.21 a barrel last Friday, compared to $69.89 a barrel the day before.
The daily report of the Organization of Petroleum Exporting Countries “OPEC” said yesterday, “The price of the basket, which includes average prices of 13 crudes from the production of member countries of the Organization, achieved its sixth rise in a row, and that the basket gained about three dollars compared to the same day last week in which it was recorded. $67.32 a barrel.





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