Oil has begun the week with the fall in quotations. Analysts believe that the deterioration of relations between the US and China is the main reason for the “bearish” trend. Official Washington considers that China has concealed the information about the emergence of the coronavirus infection. States are ready to bring China to justice by raising duties on Chinese export products.
At 8.50 am, Moscow time, the price of July contracts for the European Brent crude oil cost $ 25.97 per barrel. This is 1.78% lower than the price at which the asset closed the previous session. We recall that On May 1, the contract decreased by 0.15% (or 0.04 US dollars). Thus, at the end of the trading day, it closed at around 26.44 US dollars per barrel.
The American crude oil has been falling in price much more. At the same time, the June WTI crude oil contract fell by 7.08% to $ 18.38. Friday was successful for the asset; according to the results of the session, WTI grew by 5%, closing the session at 19.78 US dollars.
On Sunday, Donald Trump said on the air that China was trying to hide the start of the coronavirus spread. The US President has made a paradoxical statement that new duties are an important tool in the negotiation process.
At the weekend, the United States Secretary of State said that they had quite convincing evidence that the deadly virus had begun its march across the planet from the laboratory in the Chinese city of Wuhan.
Experts believe this is not the right time to take revenge on the Chinese. The resumption of the trade war will be an additional “bearish” driver for the stock markets and the oil market.
On May 1, the OPEC+ agreement to reduce oil production came into force. The purpose of the agreement is to balance the market; under the agreement, the OPEC+ countries have cut production by 9.7 million barrels per day compared with the volume extracted in October 2018. We recall that Russia and Saudi Arabia will calculate a decrease in production from 11 million b/d.
It is not yet clear how much the decline in production will affect the unbalanced market. Experts believe that the huge oil excess eliminates the positive effect of the transaction.
Last week, experts recorded another decrease in the number of existing oil drilling rigs in the United States. It should be noted that was the seventh consecutive fall in the number of drilling installations. The reduction has amounted to 53 units; at the moment, 325 units are in operation.
The material was prepared with the participation of Katya Wilson,
a leading analyst of the brokerage company UFT Group