X

Sign Up To Our Free Newsletter

Join Now

Thanks for subscribing to our free newsletter!

ERROR

  • 3 minutes Texas forced to have rolling brown outs. Not from downed power line , but because the wind energy turbines are frozen.
  • 7 minutes Scientists Warn That Filling The Sahara With Solar Panels Is A Bad Idea
  • 11 minutes United States LNG Exports Reach Third Place
  • 15 minutes Joe Biden's Presidency
  • 4 hours U.S. Presidential Elections Status - Electoral Votes
  • 4 hours Texas forced to have rolling black outs, primarily because of large declines in output from fossil fuel power plants
  • 10 hours Good Marriage And Bad Divorce: Germany's Merkel Wants Britain and EU To Divorce On Good Terms
  • 2 days Retired RAF pilot wins legal challenge over a wind farm
  • 3 days Interest article about windmills and waterwheels in Europe
Tom Kool

Tom Kool

Tom majored in International Business at Amsterdam’s Higher School of Economics, he is Oilprice.com's Head of Operations

More Info

Premium Content

Oil Prices Stabilize On Rumors Of An OPEC+ Extension

Oil traded flat on Thursday morning following yesterday’s correction driven by Saudi Arabia and other OPEC members signaling that they are considering extending the huge output cuts until the end of 2020.

Prices fell late on Wednesday afternoon after the API reported an unexpectedly large crude build. The institute reported an 8.7 million barrel build though analysts expected a 1.9 million barrel draw.

The large build in crude stocks is the first build in inventories in 3 weeks and led to a drop in oil prices on Thursday morning. Traders are now waiting to see if the build in inventories is confirmed by the EIA.

Harry Tchilinguirian, head of commodity research at BNP Paribas told Reuters that “All in all oil is pretty much flat after the price correction yesterday. The market opened lower after the shock API numbers, but it is now treading water until EIA statistics are released,”.

While oil fundamentals have clearly improved since the beginning of March, traders shouldn’t become too optimistic. Demand is improving in China, Europe, and the U.S., but a full recovery is not likely to materialize in 2020.

Investment bank Morgan Stanley expects Brent crude prices to rise to $40 per barrel during the last quarter of the year, citing improving demand as the main driver for higher oil prices. In a note to its clients, the bank states that it expects a strong rebound in demand, and even sees a supply deficit on the horizon if current OPEC+ output cuts are kept in place.

“We expect demand to rebound to about 97 million barrels per day (bpd) by Q4 as economies come out of lockdown - a significant improvement although still down about 4 million bpd year-on-year,” the release stated.

While Saudi Arabia and some of its OPEC peers may be interested in extending oil output cuts, Russia’s participation in a deal extension is far from certain. Several Russian oil industry chief executives including Rosneft’s Igor Sechin and Lukoil’s Vagit Alekperov have, in the past, spoken out against Russian participation in OPEC+ output cuts, and might do so again.

On an international level, Saudi Arabian Crown Prince Mohammed bin Salman and Russian President Vladimir Putin agreed during a phone call on Wednesday that the two nations will coordinate closely on further output arrangements. 

Traders will once again be looking to OPEC and its partners to stabilize the oil market during this tough year for the industry.

By Tom Kool of Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News