A possible Oil deal is in sight

A possible Oil deal is in sight

The fight for oil prices continues

The significant drop on Oil prices is not helping an economy that is on hold because of the Coronavirus, nor an industry that’s challenged by the very people who were supposed to help it.

Since the last OPEC+ meeting, everything went south, with an agreement breaking and a price war between Saudi Arabia and Russia. More and more pressure is added on the prices after the U.S. Energy Information Administration reported an increase in Oilstockpiles of 13.8 million barrels. The initial estimate was around a 4 million barrels increase. The demand for gasoline dropped by 25%, reaching a low last seen in 1993.

Overall, during the first quarter of 2020, Oil and Brent Oil lost more than in the last three decades combined. Oil lost 66.5%, the most significant loss since March 1983. Brent Oil lost 65.6%, the biggest decline since June 1988.

To put an end to this situation, and to keep the prices from dropping even more, President Donald Trump and his administration tried to insert themselves between Saudi Arabia and Russia. Trump said that he spoke with his counterparts on Monday, but so far, nothing has materialized.

Meetings with Oil companies from the U.S.A. are also on track for the end of the week. Trump plans to meet with the executives from the biggest companies in America: Exxon Mobil, Continental Resources, Occidental Petroleum, and Chevron. Ways in which the industry can help itself are expected to be discussed.

Yesterday Saudi Arabia increased the supply to 12 million barrels per day and wants to grow the Oil production to 12.3 million bpd this month. But the estimates are favorable to Arabs, as the director of research at Energy Intelligence, Abhi Rjendran said to CNBC, "Saudi will definitely be one of the winners on the other side." He believes that starting with 2021, the prices will go back to $80 per barrel.

For this year, the EIA expects the global Oil demand to drop by 20%.


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Sources: cnbc.com, marketwatch.com, investors.com, reuters.com

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The information presented herein is prepared by CAPEX.com and does not intend to constitute Investment Advice. The information herein is provided as a general marketing communication for information purposes only and as such it has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Users/readers should not rely solely on the information presented herewith and should do their own research/analysis by also reading the actual underlying research. The content herewith is generic and does not take into consideration individual personal circumstances, investment experience or current financial situation.

Therefore, Key Way Investments Ltd shall not accept any responsibility for any losses of traders due to the use and the content of the information presented herein. Past performance is not a reliable indicator of future results.