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Oil grows due to the balance expectations

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Oil grows due to the balance expectations
May 18
09:00 2020

The energy market ended the week in a “green zone”. The American WTI crude oil showed two-month highs on Friday. The European Brent did not lag behind the overseas brand and ended the trading week at maximum levels since April 8. Investors who believed in the rapid balance recovery of the market have forced the quotes to grow today.

So, today at 8.25 am (Moscow time) July contracts for Brent grew by 3.42% and were trading at the level of 33.62 US dollars. Over the past week, the asset has increased 4.9%.

At the same time, June contracts for WTI increased 4.55%; the market valued them at $ 30.77 per barrel. We recall that the June contracts expire next Tuesday. Over the week, the asset has soared by 19%.

Analysts believe that renewed oil demand has become the reason for the growth. In turn, the demand was provoked by the recovery of those countries that are active consumers of “black gold”. The rare unanimity of the OPEC+ countries in relation to the fulfillment of obligations to reduce global production also made the price increase.

It became known that the number of drilling rigs operating in the United States had decreased by 35 units to 339. By the way, exactly one year ago, 987 drilling rigs were operating in the United States.

The market was also supported by the information published by the National Bureau of Statistics of China.  They say that in April the volume of refined oil in China grew to 13.1 million barrels per day (in March this figure was 11.78 million barrels per day).

Analysts were extremely surprised by the unexpected statistics from the US Department of Energy on a decrease in national oil reserves, which had totaled 700 thousand barrels. It was estimated that the reserves would increase by 4.8 million barrels, rather than decline.

 

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

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