Energy market:

The market is in waiting for the OPEC technical committee meeting on the 15th, and a ministerial meeting on the 19th. Prices stopped falling. Bidders are counting on concerted action by the countries participating in the agreement to cut production.

So far, the increase in the number of infections does not cause concern in the markets. Obviously, this will continue until the authorities of the leading economic powers begin to restrict the activities of companies by means of quarantine measures.

The recovery of Brent to the level of 50.00 is possible, but this requires well-coordinated actions of the participants in the OPEC + agreement, and the absence of strict quarantine in developed countries during the second wave of coronavirus.

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Energy market:

Oil production in Libya is currently 275 thousand barrels per day. A month ago it was about zero. New barrels on the market put additional pressure in circumstances where demand tends to decline.

Oil prices continue to decline and we see no reason to revise our target at 35.00 Brent. There is still plenty of time before the OPEC technical meeting on the 15th for the market to reach this level.

With oil prices falling, exploration and production are declining. As an example, the Norwegian Equinor is starting to cut staff in the exploration sector as part of a cost-cutting program.

In addition, global drilling will be down 26.6% this year to 47,099 wells, with 84% of all drilling going to the United States, Canada, Russia and China, which is likely to surpass the United States in total drilling for the first time. 2020 year.

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Energy market:

The second wave of coronavirus is increasingly gripping the heads of traders. So the risk of a significant drop in oil prices increases every day.

OPEC + countries will have to respond to new challenges, but even a proportional reduction in production may turn out to be unacceptable for a number of countries due to the deteriorating internal economic situation. And this is a reason for conflict. However, the big players, whose budgets are highly dependent on oil prices, have no alternative. Only joint actions can remove the excess oil from the market, which will inevitably arise in the event of strengthening of quarantine measures.

The next meeting of the OPEC technical committee is scheduled for October 15, the ministerial meeting for October 19. Brent has plenty of time to drop to $ 35 a barrel.

Energy market:

The comrades from the cartel have closed the ranks.

The past meeting of the OPEC + energy ministers showed that the need to regulate production still remains. And this is the only way against the background of falling consumption. The market greeted with warmth and glee the determination of the exporting countries to keep the balance, which resulted in a 10% increase from the previously reached lows.

But, ahead of the cartel is a difficult autumn. We are waiting for the next restrictions on travel, because the number of infected is growing again, no matter what politicians say. There is no vaccine. The Russian vaccine is neither here nor there. The correct vaccine can only be made in the United States.

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Falling prices in this situation is only a matter of time. We are waiting.

Energy market:

Austrian Chancellor Sebastian Kurz announced the beginning of the second wave of the coronavirus epidemic in the country. Unfortunately, Europe has every chance of plunging into another economic collapse in a month, if not sooner. This is a serious hit for the oil market. It’s hard to say how it will end. In the worst case scenario, we can see negative prices again.

OPEC is due out tomorrow. The forecast for oil consumption in 2021 is of interest. Based on reality, it should be reduced to 95 million barrels per day from the current 97.63. If no reduction is spelled out, then this will only indicate that the cartel is publicly not ready to acknowledge the narrowing of the market in the near future. But it will inevitably happen in a pandemic.

Energy market:

Expectations of market price discounts from Saudi Arabia to the buyers, both regular and new, put prices down never approaching 47.00 level.

Since producers can increase their production capacity at any time, we are in the buyer’s market, who can choose a supplier and demand a discount.

Neither the drop in production in the US to 9.7 million barrels per day, nor the optimistic scenario for the recovery of the German economy helps.

Countries with low production costs will continue to dictate terms to other exporters both within OPEC and outside the cartel, taking large market shares due to low prices amid falling demand for oil.

As you can see, no second wave of coronavirus is needed to drop prices. But if it does exist?

Energy market:

The American hurricane story is over before it has begun. Everyone was a little afraid, mainly in the media, and forgot. Prices remained around $ 45 per barrel.

In the near future, the market will highlight the expectations of the US Federal Reserve’s comments on September 16. Also, the unemployment rate will be followed closely by the market, trying to see the economic recovery and finally remove from the radar the likelihood of negative interest rates.

In other words, before the presidential elections, which are scheduled for November 3rd, the Fed will not shake the boat and will issue a neutral comment.

It is important for the oil market to see a recovery in the US labor market. If it is not there, then prices will roll back to the area of $ 35.00 per barrel. We have been waiting for correction a long time.

Energy market:

The main conclusion of the OPEC + meeting is the appointment of a new meeting for September. So, we see a wish to communicate with each other. Now you will have to constantly share the limited size pie and make sure that small exporting countries do not violate the agreement. Well, the more interesting, but the day of the meeting of the energy ministers will be very nervous.

We believe that OPEC’s forecasts of a recovery in consumption to 97 million barrels per day by the end of 2021 are too optimistic. In addition, against the background of the approaching economic crisis, when the authorities will be forced to let those firms that are really bankrupt die. The only question is when everything will start — before the US elections or after.

The new generation loves to run on electricity because it’s just trendy. Look at the boom of electric cars, electric scooters, electric bicycles, and the rest of the «electric», and it becomes clear that the trend to move your body from point A to point B using the potential difference at the battery terminals gets up steam. And for the rest there is natural gas just two a penny. There is no place for oil in this new world.

Energy market:

Turkey goes well against Greece for the discovered oil and gas deposits off the small island of Castelrosso in the Mediterranean Sea. The air is peaceful, but the ships of the countries are within arm’s reach.

It seems that oil and gas are cheap now, but what will happen tomorrow? Resources are a reason for war. Nobody can stop Erdogan yet. It is likely that the Turkish lira, which has resumed its fall, will do this.

Israeli Prime Minister Benjamin Netanyahu announced the conclusion of a peace agreement with the United Arab Emirates. This is a step towards normalizing the situation in the main oil producing region. It will reduce tensions, at least for a few years, which will give the green light for positive development.

Trump, as a mediator, has done well here. The rest have to envy, realizing that there will be less and less another problem for the flow of cheap oil to Europe.

Russia now and in the future can no longer leave the OPEC+ table. Arab countries have embarked on a course of creation. In connection with the fall in oil prices, everyone began to carefully count their money and be friends with each other.

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Energy market:

Iraq speaks about reducing oil production on its own initiative by 400 thousand barrels per day. The princes and energy ministers say that domestic demand in exporting countries has grown amid recovery, which should reduce supply on the external market at the same production levels. Nevertheless, traders don’t hear any of this!

The bearish speculators have been increasing the volume of open positions for the second week in the expectation that Brent will not rise above 47.00. It is possible that sellers will have to endure a week, maybe two, but sooner or later the market will fall. While there are chances that America will go into another quarantine, if not all, then California in particular, there is no sense in talking about price increases.

Many internet giants in Silicon Valley (Instagram, Facebook) are directing employees to work from home until April 2021. This is a symptom. What is the growth in consumption here? Supposing OPEC would have to urgently cut production again in September.