Trending News

By using our website, you agree to the use of our cookies.

Blog Post

Oil surplus returns, OPEC is nervous, demand is not recovering
Technology

Oil surplus returns, OPEC is nervous, demand is not recovering 

This situation was last seen during a market crash in April and May amid the coronavirus pandemic.

 OPEC, OPEC

Increased oil supply from OPEC and the United States, combined with stalled economic recovery and oil demand, resulted in to the fact that the structure of the futures market again began to indicate a surplus.

This development is a headache for OPEC, which had hoped that demand will recover faster after a record production decline. The group will have to think about further production cuts or accept lower oil prices for a longer period of time.

Surplus market structure – when long-range contracts are more expensive than short-range contracts, is also an advantage for traders, as they can store oil in the hope of reselling it later with a profit. Royal Dutch Shell, Total, Eni and Equinor have all reported skyrocketing gains from trading over the past week.

September Brent futures have traded $ 2 a barrel less in the past week than futures for March 2021 delivery, the most a big discount since May, when global oil demand fell by a third due to restrictive measures to contain the coronavirus pandemic.

This pattern is known as contango and usually indicates a short-term oil surplus and hopes of a recovery in demand in the coming months. 19659004] “OPEC's experiment to increase production from August could have negative consequences as we have not yet overcome the worst in terms of oil demand,” said Rystad Energy's Bjornar Tonhaugen. “The market will go into a mini-glut again, and it won't be until December 2020 to reverse back to deficit.”

COVID-19 vs OPEC

Earlier this month, the International Energy Agency (IEA) stated that world oil demand this year should have dropped by 7.9 million barrels per day, but this forecast was slightly more optimistic than the expectation last month of 8.1 million barrels per day, however, the recent increase in cases COVID-19 and the recovery of partial lockdowns in some countries continue to impact the uncertainty in global oil demand in 2020.

Vaccine

Record incidence and death rates from coronavirus in the United States and some other parts of the world heighten fears. that a new viral wave could further undermine demand.

Experts argue that the main driver of price increases could be the development of an effective vaccine in the near future. Economic recovery can be accelerated and, as a consequence, the recovery of world oil demand.

Record Oil surplus returns, OPEC is nervous, demand is not recovering first appeared TEKNOBLOG .

Related posts

Leave a Reply

Required fields are marked *