Brent crude futures rose yesterday by 5.8 percent to trade at $ 42.3 per barrel, while the prices of West Texas Intermediate “American” WTI crude contracts rose by about 5.7 percent to trade at $ 39.6 a barrel in the last sessions of the week.
After yesterday’s rise, oil prices recorded a huge leap in the month and a half, as Brent crude rose 165 percent from the lowest price recorded on April 22 at about $ 16, while American crude jumped 293 percent from the lowest price during the same period, recorded Near ten dollars.
According to the analysis of the reports unit in the “Al-Iqtisadiya” newspaper, the rise is driven by the statements of Prince Abdulaziz bin Salman, the Saudi Energy Minister, to “Reuters”, that the conditions now include a “hoped-for success” for OPEC + Saturday meetings, in addition to positive US data indicating a decrease in the unemployment rate and an increase in the number of Jobs was the opposite of what was expected, reflecting the start of the country’s economic recovery, as 2.5 million jobs were added in May, reducing unemployment to 13.3 percent.
The oil rises during the aforementioned period came as a result of the start of the OPEC + coalition to implement the agreement, which provides for a historic reduction of 9.7 million barrels per day to meet the effects of corona on-demand with the closure of economies, in addition to increasing demand for crude with the return of many countries to open their economies gradually.
And in early May, the historical agreement between OPEC + countries began to reduce production by 9.7 million barrels per day for two months, and then reduced production cuts to eight million barrels per day from July until the end of 2020.
Later, production will be reduced by two million barrels per day to six million barrels per day, from the beginning of 2021 to April 2022.
The oil rises during the recent period came after sharp declines in the previous period as a result of the accumulation of global stocks and a significant decrease in demand due to the repercussions of the Coronavirus, which led to the closure of the countries of the world borders.
West Texas Intermediate (US) WTI delivery in May, then, fell about $ 55.90, or 306 percent, to minus $ 37.63 a barrel upon settlement.
The decline came, as this was the penultimate day for May delivery contracts, and buyers do not want to take delivery this month because US stores and wells are unable to absorb production.
The decline coincided with the International Energy Agency’s expectation that oil demand would shrink by 23.1 million barrels per day in the second quarter of this year on an annual basis, and 9.3 million barrels per day during 2020.
It also expected a record contraction in supply in the oil market at about 12 million barrels per day in May, after the agreement to cut production.
The International Monetary Fund had expected the global economy to shrink 3 percent this year.
Oil lost about two-thirds of its value during the first quarter of 2020 in the worst historical quarterly performance, to trade during the first quarter at its lowest levels since 2002 and 2003 in conjunction with the outbreak of the SARS epidemic.
The declines came in the first quarter as fears of a global recession increased by the Coronavirus, and thus oil demand was hit hard.
Prices were affected during the first quarter by an increase in oil supplies globally, after the failure of the OPEC + agreement on an additional production cut of 1.5 million barrels per day due to the Russian refusal, which prompted Saudi Arabia to announce the increase of its supplies to 12.3 million barrels per day and its exports to more than ten million barrels per day, as well the UAE also increased production at the time.
Source: Asharqia Chamber