Oil and talk about markets stability

Oil and talk about markets stability

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Analyzes about the situations that prevailed in the oil markets are conflicting , some go on to say the existence of indicators of improvement of the  market after the rise of  the prices of the  contracts of  deferred crude oil   up to 15% last week, while some believe that the markets  are facing a state of volatility and uncertainty.
The price of oil jumped  3% after China ‘s move to boost its  slowing economy  and declining  the  crude production from OPEC and the United States and Saudi pledge to limit the  fluctuations in the market, indicating that the continuous decline in 20 months perhaps reached  a crescendo.
a survey conducted by “Reuters” agency included the views of 30 economists and analysts that a little oil prices will exceed $ 40 a barrel on average this year due to weak demand and the possibility of the major producers to freeze production temporarily will not affect  largely to the decline of the glut  of global supply  to make experts to reduce their expectations for oil prices for the ninth month  respectively.
in fact, a new phase has begun after  the rise of contracts WTI US mediator 16 cents to $ 32.94 a barrel , after more than a 15% rise, which continued during these days , a reason to say that there is a move in the oil markets.
US government data  showed  a declining of the US crude oil production for the third  month  respectively to the lowest level since December 2014, while the demand on oil was increased for the first time since August .
A survey conducted by Reuters concluded that the decline in the production  of the Organization of petroleum exporting countries   in February from a record monthly level due to suspension of northern Iraq ‘s exports and disruptions at other producers.
Reuters quoted  Jeffrey Grossman,  trader  of energy markets of Ba.ar.ja ,  saying to the  brokerage in New York: “we have to accept the fact that ( the price of ) crude will rise from here. ”
The stage we are talking about is the stage of tugging and move , which began taking place in the oil markets and that early signs of it appeared after the meeting , which included four producers in the Qatari capital Doha (Saudi Arabia, Russia, Venezuela, Qatar) and followed by a meeting in Tehran (Iraq, Iran), although no  seriousness of the Iranian side in this regard, as Tehran insists on increasing the production capacity to the limits  before the UN sanctions, which may be one of obstruction factors  of  prices improvement  , but the Doha agreement  , observers see it as an achievement for the oil markets , which are overshadowed by cramping in attitudes  and the fierce competition  caused the  prices of oil to loss more than 70% of its value since the summer of 2014.
a report of the Centre for “Shall for economic Studies” in Kuwait, indicated that the reduction in the volume of oil production by 2 percent is liable to raise oil prices between 50 and 100% due to the speed in the absorption of the surplus.
The report adds  that the market responded positively to the  last agreement of  Doha to freeze production, and  oil prices are increased  temporarily, but it soon  declined  and returned to the levels prior to the agreement, and it happened shortly after the analysis of the seriousness of the agreement and feasibility. The
report pointed out that the continuation of the oil market  in  this deteriorating level, It means not only the loss of  the finance availability   for a decade, but strongly increases the vulnerability of  internal  political  and social peace   to  a real risk, and the difference between them until the worst happens   is in time and not in the result. ”
Saudi oil Minister Ali al – Naimi, expressed  during the last week  about  all   Saudi Arabia ‘s oil strategies  , saying: « the fact is that oil demand was still strong, and all   controversy raised  around it  is nothing more than just a small percentage up and down … as the global demand rates exceed 90 million barrels a day, and will rise in the long term. Therefore, I do not have any fears or concerns regarding the demand  what motivates me to welcome any new additional supply , including shale oil ». 

But specialists confirm that the improvement will continue to be relatively because of the abundance of oil supply, and as is well known markets are today witnessing a large disparity between supply and demand, and of course the continuation of this situation will delay the return of improvement or at least limit the recovery in the markets.
It is worth  to be noted that the talk about market access to the  phase of  improvement and recovery may not seem accurate.  a long way  is in front of oil prices that  possibly to extend until the end of this year, and probably ,it is true  to be described as  the status of flexible  tugging or movement , where there is no full agreement between producers and markets are still as mentioned overflewing about supply, Add to this that what has been in the OPEC agreement is to freeze production ceiling which is witnessed by the markets before, but the new is a big pressure by members of the Organization “OPEC” and beyond, as well as the growth of the global economy requirements.
markets today  are in a state of   fluctuations and pull back and forth   , and the move was due to a number of factors imposed by the data of  markets and the global economy that needs to emerge from the slowdown experienced by the major economies of the world, and the pursuit of producers to correct market path and rates,  and this move comes  at a time when voices emerging out of the tendency of OPEC and rejecting any reduction in production; like Iran , which refuses to freeze the production ceiling , but after reaching the production  to the  levels before the sanctions that were imposed on it , and do not forget the history of OPEC  which is full of  non-commitment  to the agreements, but  eventually  ,  the market situation will lead producers  to restore balance to the market , a goal of the top producers such as Saudi Arabia , but the time may be too early for that.

 

Rawabet Center for  Research and Strategic Studies