Crude oil prices fell yesterday, due to the lack of conclusion of the US presidential election, and the continuing widespread pressures of the pandemic on global demand for crude oil, which reinforced concerns surrounding economic growth.
He told Al-Eqtisadiah, specialists and oil analysts, that the devastating impact of the pandemic is expanding in the global economy, especially with the resort of many European countries to enter into a second comprehensive lockdown, pointing out that the gloomy outlook is dominating the oil market, especially in the coming winter season. Stressing that the US shale oil boom actually ended in the first quarter of this year due to the pandemic, and Middle East producers led by Saudi Arabia are the most resilient and competitive.
The specialists pointed out that international reports confirm the expansion of demand burdens, as it is likely to lose effective volumes, noting that initial estimates indicate that global demand has decreased to the level of 92 million barrels per day during the winter season, with a decrease of one million barrels per day in the United States and up To 1.5 million barrels per day in European demand.
The specialists pointed out the importance of the initiatives launched by Russia in the past few days to overcome the challenges and difficulties of the crisis situation in the oil market, as representatives of Russian oil companies and Alexander Novak, the Russian Minister of Energy, held talks about the possibility of maintaining production restrictions instead of easing them, which represents an influential contribution to producers on The pace of absorbing the oversupply in the market, especially if the “OPEC +” alliance adopted it at the first meeting of December.
In this context, Moufid Mandra, vice president of the Austrian company “LMF” for energy, says that global oil markets are entering an atmosphere of a second wave and harsher and harsher on the economies of all countries of the world. The impact of the pandemic on oil in the next six months is likely to be very wide. As prices face great burdens and sharp downward pressures, they are pushed more towards the exacerbation of the crisis by the continued growth of the high pace of building oil stocks.
He added that the state of confusion in the American political scene and the possibility of escalating the election to the court increased the state of tension and anticipation in the markets, indicating that geopolitical factors have a broad and extended impact on the stability of the oil market, in addition to other factors that also push in the direction of decline, including the rise of the dollar. It has an inverse relationship with crude oil prices.
Vittorio Musazzi, director of international relations at the Italian energy company “Sanam”, believes that “OPEC +” is most likely carrying out extensive contacts and consultations led by Saudi Arabia and Russia to put points on the letters before the meeting of the production reduction monitoring committee, followed by the expanded ministerial meeting of “OPEC” and the alliance ” OPEC +, pointing out that the market situation is very negative at the current stage, and everyone hopes to break the bottleneck soon in light of efforts to contain the massive spread of the epidemic, in addition to the anticipation of a speedy conclusion of the results of the US presidential elections.
He pointed out that the inflation of oil stocks again is another new challenge facing producers in their upcoming consultations, especially that the level of stocks has become significantly high compared to the target level, which is the average in five years, pointing out that the surplus has returned to record levels of 450 million barrels.
For his part, David Desma, an analyst at the International Energy Company, South Court, says that the real and steady boom in US shale oil ended in the first quarter of this year after the pandemic, deteriorating demand, weak prices, the financing crisis and the widespread bankruptcy of energy companies weakened this vital sector. To the challenges of this sector will be added the possibility of winning the US presidency, Joe Biden, who pledged to work to reduce interest in this sector in the interest of promoting investment in renewable energy resources.
He pointed out that shale oil production is still much higher in cost compared to production in the Middle East, especially production in Saudi Arabia, where the cost per barrel reaches a few dollars, pointing out that shale oil producers have made extensive efforts since the beginning of the crisis in reducing costs and reducing spending, in addition to To reduce employment, but they have the ability to return again in the event of a price recovery, but the outlook for the global economy is bleak in light of the pandemic crisis.
Winnie Akello, an American analyst at the International African Engineering Company, points out that the Saudi-Russian coordination in implementing the restrictions on production cuts is the guarantee not to return to the price war that occurred last March and caused a widespread collapse in prices to the negative area, pointing out that The widespread destruction of demand as a result of the pandemic can only be met with more solidarity and cohesion between producers, otherwise the alternative would be terrifying in the repetition of the scenario of severe collapses in the markets.
She pointed out that OPEC + producers began with a record level of production cuts last May, amounting to 9.7 million barrels per day, and due to the increase in consumption in the summer months locally, the reduction was adjusted to the level of 7.7 million barrels per day, and it is planned to add two million barrels to supplies from next year. But producers may backtrack on this matter in light of the current crisis, as they were betting on a recovery in demand by the end of the year, but it seems that previous calculations and estimates have changed after the pandemic spread at a more ferocious pace in most countries of the world.
On the other hand, regarding prices, oil prices fell yesterday, with Democratic candidate Joe Biden approaching to victory in the exciting US presidential election, but it is likely that the Republicans will retain control of the Senate, which reduces the chances of implementing any major easing package from the repercussions of the pandemic. Covid-19.
By 07:56 GMT, WTI futures were down 60 cents, or 1.53 percent, to $ 38.55 a barrel, and Brent crude futures were down 64 cents, or 1.55 percent, to $ 40.59 a barrel. The two crude contracts jumped by 4 percent, the day before yesterday.
Biden expected that he would outperform his rival, President Donald Trump, after winning two critical terms, while Republicans spoke of allegations of fraud, filed lawsuits and demanded a recount in a race whose outcome has not yet been decided.
The current vote count indicates that the Republicans will retain control of the Senate, while the Democrats will get a slight majority in the House of Representatives. A split in Congress between the two parties is likely to hinder Biden from enacting legislation on important priorities such as fighting climate change or easing sanctions on oil-producing Iran.
On the other hand, the OPEC crude basket rose, reaching $ 39.09 a barrel on Wednesday, compared to $ 38.44 a barrel the previous day. The daily report of the Organization of Petroleum Exporting Countries (OPEC) said yesterday that the price of the basket, which includes the average prices of 13 crude produced by the member states of the Organization, achieved its second consecutive rise, and that the basket gained about one dollar compared to the same day last week, which was recorded. It has $ 38.42 a barrel.
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