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