Yesterday, there was a drop of quotations in the energy market. Today, the assets are slightly adjusting in spite of the information about an additional reduction in production.
At 7.50 Moscow time, the July contracts for the European Brent crude oil rose 0.27% and were trading at $ 29.71 per barrel. We recall that yesterday, the asset fell by 4.3% or $ 1.34.
At the same time, WTI June contracts increased 83% and were trading at 23.34 US dollars. Yesterday’s decline totaled 2.4% or $ 0.6.
Yesterday, it became known that Saudi Arabia had decided to reduce production in June by an additional million barrels per day. Compared with April, the decrease will amount to 4.8 million b / d. Official Riyadh said that the goal of that step was the country’s desire to force other cartel members to fulfill and exceed commitments to reduce production and stabilize the global oil market. The UAE and Kuwait supported Saudi Arabia.
Saudi Arabia’s statements did not have a significant impact on the oil asset behavior. Investors understand that the reason for this populist step was not the desire to set an example to follow, but the banal lack of demand for “black gold”.
Moreover, the quotes are being pulled down by the fears of market participants regarding oil storage facilities. The problem with a lack of capacity has not been resolved; and against the background of a likely second wave of the pandemic, the absence of oil storage tanks can worsen the situation even more.
The material was prepared with the participation of Katya Wilson,
a leading analyst of the brokerage company UFT Group