Crude oil prices started to decline today. The reasons for the panic turned out to be more than enough, but first of all, market participants were worried about the increase in raw material reserves in the United States of America.
The data of the API (American Petroleum Institute) makes traders think about the further situation. As it became known, US stocks of crude increased by 8.4 million barrels over the past week. Gasoline reserves, on the contrary, showed a slight decline, which, however, was not as significant as previously thought, and amounted to 2.9 million barrels. But the volume of distillates increased by 4.3 million barrels. Stocks of black gold on the territory of a strategically important object in Cushing were marked by a decline of 2.3 million barrels, which is an inspiring, but not so strong factor for the market.
Nevertheless, official data from the state authorities did not yet exist, so the whole world froze in anticipation of a report from the US Department of Energy, which should be presented today in the evening. In the meantime, we can be satisfied with the preliminary forecasts of analysts who believe that the statistics should be quite positive: the decline last week may not be less than 3.2 million barrels.
A forecast has already been made for the correction of the average oil production in the current year in the United States of America. The Ministry of Energy reduced it by 100 thousand barrels, which sent the figure to the level of 11.6 million barrels per day. Thus, if we compare it with last year’s results, it will become clear: there was a decline of about 0.7 million barrels per day this year.
In addition, a preliminary forecast for the value of Brent crude oil in average annual equivalent has become known. So, by the end of 2020, an average price of $ 37 per barrel is expected, and it can rise to $ 48 per barrel next year.
To date, investors have begun to fear again that the supply of raw materials will become much more than the demand for it, as already happened at the very beginning of the COVID-19 pandemic. It is especially embarrassing that the demand for fuel from the largest consumer of black gold in the world has not started to increase steadily.
Despite the fact that the price of oil has been at the stage of active growth for almost the entire past month, there is no discussion regarding a full-fledged market recovery, since after a huge decline, the rise remains not too confident and stable. And the price level of raw materials, which is now quite high, can lead to even greater problems in the market. Raw material producers may begin to open previously shut down production capacities, as the situation is pushing to make money on it. This, in turn, will create an even greater excess of supply, which will inevitably affect the price.
At the same time, according to the United States Department of Energy, global demand for crude oil in the second quarter should be at the level of 83.8 million barrels per day, which is 16.6 million barrels per day lower than the level recorded in the past year. The proposal should be around 92.6 million barrels per day, which is 7.9 million barrels per day lower than the same period last year. The reduction in supply is explained quite simply: OPEC countries have reduced their production, as well as the active development of new wells in America has declined. Both were affected by world prices for hydrocarbons that were too low.
Nevertheless, oil demand in the third quarter of this year should grow slightly and take the mark of 94.9 million barrels per day. On average, it will be about 92.5 million barrels per day for the year. According to analysts, demand will increase to 99.7 million barrels per day next year, which is identical to the indicator that was recorded in the pre-crisis period of consumption.
The price of futures contracts for Brent crude oil for delivery in August declined by 1.12%, or 0.46 dollars this morning on the trading floor in London, which sent it to the level of 40.72 dollars per barrel. It can be recalled that yesterday’s trading session ended at $ 41.18 per barrel, which recorded an increase of 0.9%, or 0.38 dollars.
The price of futures contracts for WTI light crude oil for delivery in July on the electronic exchange in New York also showed a negative trend, which amounted to 1.49%, or 0.58 dollars. They began to cost 38.36 dollars per barrel in the morning, while it ended at 38.94 dollars per barrel yesterday, which was a sign of growth of 1.96%, or 0.75 dollars.
Lastly, the cost of crude oil will be consolidated in the region of $ 40 per barrel, the upward trend remains to be in lead.