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Oil prices close the fourth month of the year with a slight recovery in their prices. But the true formula that would bring the prices of this raw material, at least to the beginning of the year, is a mixture of lower production, global economic reactivation and a vaccine to combat covid-19.
In fact, the price of a barrel of Brent maintains its upward trend this Thursday in the London futures market and it rises 11.5 percent at mid-morning compared to the close on Wednesday, and stands at $ 25.31.
In the United States, for its part, the WTI was also posting gains this morning the day after statistics revealed a less worrying-than-expected rise in US stocks and thanks to signs of declining production. This allows a 17 percent rise in the barrel of crude of this reference, bringing the price to more than 17 dollars, after in mid-April it registered negative prices for the first time in its history.
But these signals are still not enough a part of tranquility for the markets, according to analysts, who consider that, although there are aspects that would suggest a change in the trend of crude oil prices, there is still a long way to go before returning at prices seen even at the end of last year.
For Edward Moya, market analyst at Oanda, “Oil volatility will remain high until production cuts finally balance demand devastation. Oil prices can easily fall back to this week’s low as prospects for a steady rebound in oil demand remain very uncertain. “
The expert maintains, however, that oil prices are rising as efforts to reduce crude production intensify and hopes for a treatment to combat covid-19 grow, and suggests that Global storage capacity limitations are forcing the greats, the Saudis, and the Russians to cut production sooner and more deeply.
Crude oil prices are rising as production reduction efforts intensify and hopes for a treatment to combat covid-19 rise.
There is consensus among market analysts that, beyond the timid reactivation that may occur in the different economies of the world, lor that it would really help to raise oil prices further is an aggressive cut in production, because there is a greater demand from the large consuming countries of this raw material, such as China, it will take time to arrive, while fears persist to fully open the economies as long as covid-19 does not completely disappear and a cure is found to combat it .
This is what analysts at the brokerage Casa de Bolsa think, warning that “so that
oil prices recover in all their terms supply needs to decrease, which could be achieved with a more aggressive cut in production by OPEC or the bankruptcy of oil companies that are no longer profitable at this price level. “
They add that a reactivation of demand is necessary, which will remain behind as global confinement continues, seeking to control the spread of COVID-19.
By: Economy and Business
With agency support
