Oil cuts its full-countdown collapse for the G20 and OPEC


OPEC itself acknowledged in its monthly report a "growing supply surplus" in the oil market

The week begins with a truce in oil, dropping to 8% last Friday. Brent comes off the lows of more than a year and recovers, sometimes, the $ 60, in total countdown for the summits of the G20 and OPEC.

The strength of oil price increases during the first 10 months of the year triggered investors' susceptibility to the crude oil market. Turbulence is occurring and raises its levels of volatility to unprecedented levels since 2016, the year it started with sunk oil at $ 27.

The last few weeks have made oil prices drop almost normal. In just ten days, oil recorded three days with losses near or greater than 6%.

Last Friday, the hobo scratched up to 8% in the case of the West Texas barrel, a reference in the US. Its price dropped to $ 50.4. In Brent's barrel, the 6% reverse dragged its price to below $ 60, to $ 58.88, the lowest levels in more than a year and 30% below the peaks of early October. .

The week begins with a truce of investors in the oil market. The return gains strength and exceeds 2% sometimes. This reaction boosted the price of Brent's barrel to intraday levels above $ 60. The price of the West Texas barrel, a benchmark in the US, recovers at $ 51.

The overall improvement in markets attenuates latent warnings about the degree of global warming, a situation that would directly impact the demand for crude oil. The European agreement on Brexit and the improvement of prospects for Italy at least momentarily removes the worst scenarios in Europe.

The G20 as a preview of the OPEC summit
On a more global level, the outlook could be significantly adjusted this weekend at the G20 summit. All the lights in this appointment are put on the meeting that will keep leading leaders from the US and China. At their meeting, Donald Trump and Xi Jinping could sign peace in their tariff war. This deal would help ease fears of an economic slowdown and lower demand for oil.

But in recent days, the magnitude of the oil collapse has raised the expectation generated by another meeting that will take place at the G-20 summit in Argentina. The program includes assistance from top executives from the two largest oil exporters, Saudi Arabia and Russia, who will share the stage with Donald Trump, OPEC's biggest scourge in recent months, with its warnings against a cut in production. .

Saudi prince Mohammed bin Salman and Russian President Vladimir Putin have tried, with unequal success, to control the oil market in the last two years. The pact of OPEC and other producer countries, such as Russia, to try to regain the balance in the oil market will be reviewed in just a week and a half.

The presence in Argentina of the two top executives from Saudi Arabia, de facto leader of OPEC, and Russia, the leader of the non-OPEC pact-related countries, could provide relevant news on the negotiations to move forward in an imminent production cut .

On December 6, the OPEC summit will consider approving a reduction in its pumping quotas which will help reduce the forecast of oversupply and, by extension, delay the recent collapse in oil prices.

The leaks ahead of the OPEC summit point to a debate that focuses on reducing crude oil production by about 1.5 million barrels per day. OPEC itself acknowledged in its monthly report a "surplus supply surplus" in the oil market, and the International Energy Agency estimates about 2 million surplus oil in the first half of 2019.

The effectiveness of the cut that OPEC completes will also depend on the flexibility of the sanctions imposed by the US. to Iran. The blockade came into effect earlier this month but the US has decided to grant exemptions to Iran's main buyers of crude oil, so the impact of these sanctions has been virtually nil to this day, contrary to what was predicted in early October , when Brent's barrel hit 2014 levels above $ 86.


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