Oil prices fell just 2% on Wednesday, may 22, showing the strongest decline over the last two weeks. On Thursday it fell by another 1.8 per cent to 69.5$. per barrel. Although in General the “black gold” remains high, some experts see the incident on the preconditions for the coming fall. Which can verge on collapse.
Let’s start with the fact that the fall in prices accelerated after the publication of data on stocks of oil and oil products from the US Department of energy. According to them, the ocean increased not only the supply of crude oil, gasoline and distillate, but also production, which is updated a new record. The United States began to produce 12.2 million barrels. a day.
In addition, quite unexpectedly, Washington resumed its purchases of Venezuelan oil, which is actually before he imposed sanctions. Last week’s deliveries amounted to 49 thousand barrels per day. It is not that much compared to 352 thousand per day, which the United States received before the deterioration of relations. But the fact of the resumption of the supply sent the market a signal.
However, much more significant factors for the reduction in oil prices could be a trade war between the US and China. Amid rising tensions between countries began to grow and the dollar, which is considered one of the most reliable currencies. But risky assets began to fall. More surprisingly, the ruble in such circumstances, manages to keep their positions (in many ways they are supported by the successful placement of OFZ). But, experts say, if the markets and oil prices go down, the ruble will follow.
Trade war, meanwhile, is gaining momentum. The US imposed sanctions against the Chinese Corporation Huawei Technology Inc. Probably in response, Beijing has banned the use of Apple products, particularly IPhone. How to write the Western media, Japan and the UK at the level of business and political circles, the decision to join the blocking activity of the company. If this happens, Huawei may lose the main suppliers of technology and components for its devices that will give them a serious blow.
But that’s not all. US senators from both political parties gathered to prepare a bill that would force Washington to take action against Chinese individuals and legal persons involved in “illegal and dangerous” activities of China in the South China and East China seas.
Given such developments, the markets froze in suspense. If there was a new round of escalation, it may have the effect of a bombshell. Then the price of oil will go down. It would be very unpleasant not only for our budget and currency, but in other circumstances. For example, it is now independent filling stations in Russia are again talking about the coming of a new round of fuel crisis. And that the increase in the price of gasoline, we will inevitably, despite assurances from the authorities to the contrary.
Paradoxically, the fall in oil prices on world markets in Russia can be used as argument to increase prices of gasoline and diesel fuel. However, we cannot say that the fall in oil prices in the world — the problem is solved. For example, in a conversation with “SP” independent economic expert Anton Shabanov expressed the opinion that what we are seeing is the normal volatility for the market.
“Nothing big in the market of oil is not expected. Unless there’s some news that we don’t know yet, but I know some of the players. And therefore begin to sell assets. But for mere mortals, the current situation looks like a normal correction. For each of the market movement you should not respond.
Although the problems are indeed possible. In particular, related to trade wars between China and the United States. But while it is an open question. We don’t know even a ballpark development scenario. I would say that what we see now is a temporary volatility,” — said the expert.
On the other hand, in addition to creating nervousness in the market, actively on the slide in oil prices play the United States. And they are unlikely to stop there.
— Prices of oil are decreasing second day in a row mainly because of the oil reserves in the United States — says the expert “International financial centre” Gaydar Hasanov. — The American petroleum Institute and energy information Administration of the USA has published data on stocks which are fundamentally different from the expectations of many market participants.
The oil reserves in the U.S. increased by 4.7 million barrels, although most large investors, on the contrary, expected reduction. The US is trying to manipulate the market, declaring such startling figures on oil reserves and, thereby, undercutting the prices.
In my opinion, they do it on purpose, because the tensions in the middle East poses a threat to the sharp rise in oil prices. The tense situation between USA and Iran in which the two sides exchanged tough remarks against each other, creates the threat of full-scale military conflict.
“SP”: — Many experts say that oil prices will fall, but the conflict with Iran, on the contrary, lead to their growth. So what’s more likely?
Large players can not decide on the global oil market, since the inconsistency of the influence of external factors makes them for the most part be out of the market. And those who already had futures contracts on oil for the purposes of speculation, trying to fix the previous profits on contracts in order not to lose the advantage.
We need to understand one simple thing: war between the US and Iran will not. America is not in a position to fight on all fronts. A trade war with China takes a lot of time and effort.
On the other hand, although the US win the global oil market and dream to be the only exporter of electricity. But this plan prevented the OPEC countries led by Saudi Arabia. As well as Russia.
“SP”: — That is an agreement to reduce oil production not in the interests of the United States?
The basic scenario for the reduction of oil production by OPEC countries+ in order to stabilize the global oil market for the US was the best in terms of what the US has stepped up oil production, while the rest of its cut.
The prices for “black gold” since the beginning of this year actively growing. Prices range from 65 to 75 dollars was optimal for both exporters and importers. Above prices are for US unacceptable. In the sense that States do not only sell, but also are a major importer of oil. In particular, due to sanctions against Venezuela, they buy it even from Russia.
Given these conflicting factors, oil prices will be under pressure. Many market participants will expect an OPEC meeting+ next month where a decision will be made on the renewal of the Covenant, the reduction of oil production by the end of this year. This scenario is quite likely, as the trade war the United States and China threatens to reduce global demand for oil due to the decline in the growth rate of the economy of many countries.
Analyst group of companies “Finam” Alexey Kalachev recognizes that the probability of the collapse of oil prices there. But not yet too high. In any case, the decline should not strongly affect the exchange rate. But gasoline prices may “fall victim” to the current situation.
— There are several factors that is of concern to the oil market. First, more and more talk that the OPEC deal+ reduction of production will be terminated. It’s quite a controversial concern because there are indications that even some time the agreement will work.
The market is volatile, but it should fluctuate. He is not able to lie in the Ticker, that would be weird. Threats are routinely given the opportunity to let off steam buyers and sellers of futures to hold the market in a normal trading range, which suits all prices.
The main Foundation for concern is the exacerbation of trade wars between China and the U.S., which reached a new level. Sharp break of negotiations, the increase in duties from Washington and the expectation of retaliation of China — all this irritates players, as it can lead to full-scale economic crisis.
The market can already see the first signs of a global economic slowdown. For example, started falling car sales, which grew. Reduced turnover in world trade turnover and transport. Decrease as the aviation and container transport. If a trade war will enter a new phase, the economy will slow, demand for raw materials will fall as respectively, and the price of oil. This risk is real and justified.
But I still think that talks between Washington and Beijing will continue. Production will increase and decrease depending on market conditions. Some time we will stay in the price range of $ 65-75 per barrel. Then they will not fall, because as soon as this fall, will be taken serious measures.
“SP”: — what What?
— When approaching 60-65 OPEC+ will gather and decide to further reduce the prey, and at prices above $ 80 per barrel, on the contrary, starts to increase. The repetition of the scenario of 2015-2016, when oil fell below 30 dollars a barrel, it’s not very likely, since there are already regulatory mechanisms, they work, and they still have hope.
“SP”: — the Decline in oil prices will affect the ruble?
— The fall in oil prices up to $ 40 per barrel at the exchange rate of the ruble does not affect. Now, if the price goes below 40, this dependence will appear again.
Our currency is strong enough to get rid of oil with fiscal rules. Let me remind you that all oil and gas revenues of more than $ 40 per barrel go into the national welfare Fund. So the exchange rate in effect controlled by supply and demand to buy the dollar. Because of this, we have a fuel crisis.
“SP”: — How is it connected?
Usually when expensive oil — strengthened the ruble. And our refineries received raw materials for the same ruble price. And when the ruble from the “black gold” untied, it turned out that the oil suddenly went up, and the ruble podeshevel of the end for the refinery almost doubled the cost of raw materials. Because fuel prices in Russia went up.
“SP”: — And if the price of oil falls, it will affect the price of gasoline in us?
Will have an impact. But you need to understand that the internal and external market is not so closely related, we are trying to impress. Actually produced in our country gasoline for export is only 10%. The oil companies more profitable to sell semi-finished products, raw materials for further processing. They can earn.
The difference between the stock and wholesale price and netback (market oil price from the end consumer minus the cost of delivery from the point of production — approx. ed.) is about 20%. Between the market price and the average retail price in the country — about 12%. This margin is, in principle, enough to maybe not fatten, but it is quite normal to exist a gas station networks, especially if they are in the oil companies. They just would like to have more. So they are outraged.
Could the fuel market again to transfer to a market economy, abandoning the freezing. But at the same time radically reducing the excise tax on fuel. By and large, it is the excise tax so jacked up gasoline prices. They make up 20% of the retail price. That is, the state takes a significant share of revenue. But it’s kind of like “not at Affairs”.
But since government is unlikely to go, most likely, will have to extend the manual regulation and freezing of prices.
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