Oil rises in price in anticipation of withdrawal from quarantine
The price of Brent crude oil on Wednesday, 3 June, exceeded $ 40 per barrel for the first time since March. Prices are rising due to the prospect of extending cuts in OPEC production as well as hopes for a recovery in demand, weakened by the epidemic of the coronavirus.
Brent crude for August delivery rose by 1.77% to 40.27 dollars per barrel by 11:00 Kyiv time, the price of WTI rose 2.36% to 37.68 per barrel. Earlier, both contracts has reached the highs since March 6.
Both reference varieties have risen sharply in recent weeks from April’s lows, aided by the ongoing recovery in China, the epicenter of the outbreak of the virus. In addition, other countries gradually remove the quarantine restrictions.
The group OPEC+ is considering extending the cuts of production at 9.7 million barrels per day, equivalent to about 10% of world production, before the end of July or August. Meeting of the group was to be held on June 9-10, but can be moved to 4 June.
“Even deeper cuts will accelerate the process of rebalancing the market,” said analysts at ING Economics, noting that “as you move into the second half of this year the market is set to shift from surplus to deficit.”
According to the forecast, in 2020, world oil consumption will shrink to just under 92 million barrels per day. This is less compared to 100.2 million barrels a day in 2019, before the pandemic swept Europe and the United States, which led to a decline in demand for fuel.
Note, the NBU in its macroeconomic forecast laid the average oil price in 2020 at 35 dollars per barrel.
As reported RBC-Ukraine, the IMF expects oil price to fall to 35.61 dollars in 2020 and to $ 37.87 per barrel in 2021.