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Oil recovers due to the news about drilling stop in the US

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Oil recovers due to the news about drilling stop in the US
April 24
09:00 2020

This week, “black gold” seems to get crazy. Oil futures of the American WTI crude oil have shown negative values. Then the oil drop was followed by the equally sharp increase. Since the beginning of last month, the intraday volatility of WTI futures contracts has amounted to a total of 10%.

Today, the market is revitalizing – the quotes are at a good start. This is due to the fact that in the United States, oil producers have launched the process of closing oil wells. It is estimated that this measure will reduce national production by about a fifth. Experts estimate that the volume of production, which may be temporarily suspended, is 1.75 million barrels per day.

Analysts believe that it is impossible to avoid new surges in prices, because so far no signals have been given to restore demand.

There are great hopes for a quick restart of the Chinese economy. But you should bear in mind that during the down time, China has accumulated approximately 1.3 billion barrels of oil, which would seriously limit imports in the near future.

Kuwait and Algeria have decided to reduce production without waiting for the entry into force of the OPEC+ agreement. The measure is excellent, but it is unlikely to restore the balance between supply and demand.

During yesterday’s trading session, the June contracts for WTI crude oil increased 20%, contracts for Brent crude oil grew 4.7%. This has happened because there is the hope that China will nevertheless begin to buy energy resources, and not spend accumulated reserves. One more reason for the growth of WTI prices is another round of conflict between the United States and Iran.

Today, at 7.15 Moscow time, June futures for Brent crude oil were trading at around $ 22.53 per barrel, which is 5.6% more than the level at which the asset closed yesterday’s trading session.

At the same time, WTI June futures grew 7.8%, the asset was trading at around 17.78 US dollars per barrel.

 

The material was prepared with the participation of Katya Wilson,
a leading analyst of the brokerage company UFT Group

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