the Rapid increase in oil prices by almost 20% over the week gave way to fall 5% on Friday after growing tensions in the rhetoric between the US and China, and uncertainty of the Chinese authorities in the economic recovery after the pandemic.
the European Oil benchmark Brent fell $1.8, or 4.8% to $34,3 per barrel by 14:00 Moscow time, according to exchange data. Us benchmark West Texas Intermediate (WTI) dropped almost $2, or 6%, to $accounting period by 31.92 per barrel.
In early trading, oil prices in London and new York became cheaper and stronger – at $3. The price began to fall in the morning, once in China on Friday, 22 may, opened the annual session of vsekitajsky meeting of national representatives (vsnp), which was postponed approximately two months due to the outbreak of coronavirus.
China, the second economy in the world after the United States decided not to set a target rate of economic growth. “I would like to note that we did not set a specific goal for economic growth this year, said Premier of the state Council of China Li Keqiang. Due to the fact that our country will encounter some factors which are difficult to predict”. He noted the “considerable uncertainty about the pandemic COVID-19 and the world economic and trading environment”.
Between the US and China is increasing tension in the trade confrontation and political debate about the freedoms in Hong Kong. China is going to introduce new national security legislation in Hong Kong, which caused a warning to U.S. President Donald trump.
pre-Election attack trump on China could be worse than the virus. Washington intends to remind Beijing all the old wrongs: currency manipulation, weak yuan and the trade deficit, the 5G connection, the status of Hong Kong and so on, according to economic commentator Grigory Beglaryan.
“Investors are once again faced with increasing verbal war between the US and China,” said Reuters Stephen Brennok of brokerage PVM. “The coronavirus has wiped out a decade of growth in global demand for oil, and its recovery will be slow,” he warns.
the oil Market has not yet emerged from the darkness. As said Eugen Weinberg of Commerzbank, “we believe that the recent price rally in oil markets was excessive”.
the Organization of countries-exporters of oil and its allies, known as OPEC +, which unites 23 countries, reduce the supply to a record 9.7 million barrels a day from may 1 to support the market. To them decided to join 9 other countries, had avoided earlier production cuts. In this case, the reduction may reach 20 million barrels.
Data on supply indicate the beginning of a steady implementation of the agreement OPEC+. The threat of market saturation and storage capacity is weakening. The oil reserves in the U.S. fell last week.
the Price of oil on the markets collapsed 2 times at the end of March 2020 after the termination of previous agreements OPEC+. The price of Brent crude reached a 21-year low below $16 in April, and the price of contracts for the supply of us oil has reached negative values. With the reduction of the pandemic and growth in the world consumption of fuel oil has risen more than 2 times with the support of the OPEC cuts+.