Tuesday , August 9 2022

Oil increases its fall and become another focus & # 39; global turmoil


Trump, the day of & # 39; before yesterday, during a conference call at the White House with & # 39; members of the armed forces Source: AFP – Credit: Mandel Nigan

The crude prices reached the lowest levels in & # 39; more than a year, due to the economic downturn, the business of war and possible oversupply

LONDON (Reuters) – Oil rose to the lowest level in & # 39; more than yesterday year and forced the big companies & # 39; to shed energy, in a climate of & # 39; nerves because of economic relaxation and outstanding talks on trade war & # 39; the United States. and China, at the Summit of the G-20 next week at & # 39; Bus Buenos Aires.

Fears & # 39; to the global economic downturn can & # 39; affect demand for oil, and uncertainty about the conclusions & # 39; & # key meeting in 39; December from OPEC countries, you can & # 39; leads to excess & # 39; oil supply, along with & # 39; exasperate investors and dropped & # 39; prices for the seventh & # 39; consecutive weeks.

Brent Crude, the international standard, lost 6.07% to $ 58.80 per barrel. During the session welcomed & # 39; the lowest level since October 2017 to 58.41 dollars. And the light crude lost 4.21 US dollars, 7.71%, to 50.42 dollars per barrel, also its lowest level since October 2017. The olive oil giants Chevron and Exxon fell by 3.4% and 2.7%, respectively .

"The whole week was very difficult for oil prices, which reached new levels in & # 39; more than a year due to concerns over oil surplus and fears about global growth," said Lukman Otunuga, analyst the FXTM. .

But the most imminent factor is the scheduled talks between Donald Trump and Chinese President Xi Jinping the next week, where they are expected to address the protectionist escalation by Washington blast across the global board.

"The diminishing oil, continues to decline, and it seems to worry to many investors that growth in the world is declining," said Jeff Kravetz, director & # 39; regional investment in the US Bank Private Wealth Management.

Reducing caused most of the commercial war between the two major economic powers, as noted by Phil Flynn, analyst at Price Futures Group. "The market is contemplating economic slowdown, anticipating that Chinese trade negotiations do not go well", he said.

The crude prices rose to the highest level in & # 39; four & # 39; & # in 39 years, in October, to $ 85 per barrel. F & # 39; then considered fears & # 39; drop in supply due to new sanctions the US on Iran, a giant of the global oil but on bad terms with the trump government, which reversed -approċċ Barack Obama that his predecessor had achieved.

Since then, prices have fallen by & # 39; more than 30%, in & # 39; re period & # 39; expectations that the bucket got from top to bottom in & # 39; sea & # 39; unstable values ​​and forecasts impossible.

A few weeks after the entry into force of the sanctions, which have exemptions that allow many countries to continue importing crude from Iran, investors were concerned in the opposite direction. They m & # 39; longer feared because of scarcity, but the excess & # 39; waste market.

After Trump talks and some f & # 39; Bus Buenos Aires, the focus will be on meeting & # 39; the Exporting Petroleum Countries (OPEC) in Vienna, a week later. No m & # 39; is sure if the Arab monarchies and other members of the powerful cartel decide to open more tap or restrict flow to raise prices.

Saudi Arabia and other OPEC members have recently expressed their willingness to consider a reduction in production during the meeting & # 39; Vienna. But more and more pressed Washington to Saudi Arabia and the entire oil club chosen not to reduce production and b & # 39; thus favoring lower prices.

With the balance of chances to turn from side to side, many investors as yet induce price reductions even "even if the exporting countries & # 39; OPEC could cut production at their meeting , "said Otunuga.

Saudi Arabia plays a decisive role at the heart of the cartel and its attitude in Vienna yet seen. Trump congratulated Riyadh on Wednesday to help reduce with its pumping oil prices in & # 39; recent weeks, and comparing it with & # 39; "big tax cuts" to enhance activity economic.

"The crude prices are falling, good! Like a big tax breaks to the United States and the world, enjoy! Thanks, Saudi Arabia, but let's have fallen!" The tycoon wrote on Twitter. "Thank you Saudi Arabia, but going further," wrote Upon his club a Lago f & # 39; Palm Beach, Florida.

The Crown Prince Saudi Mohammed Ben Salman, with a reputation as a reformist leader who fell & # 39; away after the murder of journalist Jamal Khashoggi, will be heading to the G-20 in & # 39 ; Bus Buenos Aires. The Russian President Vladimir Putin will also be responsible for another with the ability to influence the prices of oil power. Trump Putin and exchanged a few words about oil when overlapped in the end ceremonies & # 39; First World War, in & # 39; Paris.

F & # 39; & # 39 complied with; Trump, Putin said he was "happy" with prices and would not commit to reduce production, as some members & # 39; OPEC asked. While OPEC reported it expects to get & # 39; back to the decrease in production, Russia has adopted a strategy of & # 39; "Wait and see".

The reasons behind the volatility

The peaks and crude oil losses and its direct relationship to diplomacy in the Middle East

Why fall of oil prices?

In recent months the market has changed in priority & # 39; sigh. When the large producers, including OPEC and Russia, met in Vienna in & # 39; in June, the main concern was the potential for price rebound and whether the reserves were adequate. The decision & # 39; & # 39 Trump to get; impose sanctions on Iran threatened to take a large amount of & # 39; oil off the market. During the boreal summer, the Saudis and other producers ceased production since 2017 opened the taps to ensure consumers and Trump. Maybe they were too proactive. Operators have stopped taking interest in Iran and focused on other factors, for example, if the commercial struggle & # 39; Trump with China and increasing rates of & # 39; interest may hamper global economic growth and demand for oil. At the same time, production in the US increased by & # 39; a faster pace than expected. There was also in Libya, even if the war continues, and remained better than expected in Venezuela. According to analysts, large volumes of & # 39; re accumulate oil in & # 39; storage tanks around the world, and it increases the fear & # 39; a & # 39; New oversupply.

S & # 39; is the impact of sanctions on Iran?

Indeed the 5 & # 39; this month, had less effect on Iran's production by some analysts had predicted. Shoppers were expected to reduce purchase & # 39; crude from that country before the sanctions, but it seems that this action only moderately reduced the production of Iran. For example, OPEC reported that the Iranian production in & # 39; October decreased by & # 39; 4.5% compared to the month & # 39; before. Some background to explain why the impact was weak: the Trump temporary exemptions to government of Iran's largest customers, including China, India and Japan. The oil traders interpreted the government's generosity to the possible reduction in Iranian exports can & # 39; be lower than expected. The exemptions to Japan and Korea t & # 39; South, which had stopped buying Iranian raw materials, were surprising. Can & # 39; indicates that government priorities are more inclined to keep prices low for American consumers to joppressaw to Iran. If so, it seems that the strategy is working: the price of gasoline in the US is & # 39; $ 2.61, compared to & # 39; $ 2.85 a month & # 39; before.

What factors determine the price?

There is increasing pressure on OPEC to propose prices when the organization meets & # 39; with Russia and & # 39; Other producers in Vienna in & # 39; December. Experts expect reduced production of & # 39; about one million barrels a day, about 1% of world reserves, to be announced. M & # 39; there is no doubt that the Saudis can make reductions & # 39; this size. After all increased production by & # 39; 700,000 barrels per day compared to the 2017 average production. Saudi Arabia can & # 39; have trouble convincing producers such as Russia and Iraq also create cuts. Perhaps the Saudis have complicated travel path between the trump government pressure to lower their prices and the economy needs to have greater profits. There is a good chance that Russia and Iraq decide that accepting the cuts would & # 39; beneficial to their interests. A few months ago seems to have been Saudis have oriented the market towards more comfortable price levels to coordinate their objectives by reducing production to Russia and & # 39; other countries. Now the Saudis are other again & # 39; inkomuża in the position of being pressured by producers & # 39; shale & # 39; USA.

Descent does not stop

Pending the meeting of the OPEP on 6 & # 39; in December, the main indices of crude oil continued to fall because of fears & # 39; a & # 39; oversupply

The Brent, which is extracted mainly from the North Sea, fell & # 39; more than 4% yesterday, although the producers have looked to reduce production

$ 58.80 per barrel

The price drop & # 39; fear & # 39; a & # 39; oversupply

Drop & # 39; 30% per month

F & # 39; October reached its highest level since 2014, when it was believed that the offer comes & # 39;

The WTI (West Texas Intermediate) which is extracted in & # 39; Texas and Oklahoma, yesterday continued the process & # 39; drop ago record seven & # 39; weeks

50.42 dollars per barrel

It was the value received yesterday for deliveries in & # 39; January loss & # 39; 6.96% in & # 39; one day

34% reduction per month

On 3 & # 39; in October, the WTI of & # 39; Texas reached its peak in & # 39; years

Agencies AFP, AP and Reuters

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