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Source: Reuters – Reuters
Oil prices fell slightly to $ 26 a barrel today, Friday, with OPEC and its allies beginning a record production cut.
The global benchmark Brent crude price has collapsed 60% since the beginning of this year, and reached its lowest level in 21 years last month, as the Corona Virus pandemic demands pressure.
Brent crude for July delivery fell 45 cents, or 1.7%, to $ 26.03 per barrel. And US crude for June delivery fell 46 cents, or 2.4%, to $ 18.38 a barrel. Benchmarks rose sharply Thursday. Brent rose 12% and US crude oil gained 25%.
The Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, in what is known as the OPEC + group, began cutting production by 9.7 million barrels per day today.
GBC Energy analysts say demand is likely to post a lower return, which would impact the impact of producers’ efforts to deal with oversupply.
“Oil demand is likely to be disappointing even if end consumers meet the more optimistic expectations of a recovery in demand, due to increased inventory pressure in the past month,” GBC said.
A Reuters poll yesterday, Thursday, showed that prior to the new production cut, OPEC sharply increased output to the highest level since March 2019, increasing market oversupply.
Highlighting the difficulties some producers face in meeting their obligations, industry sources said Iraq will face difficulties in meeting its share of production cuts by about a quarter. Iraq is OPEC’s second largest producer.
Prices were also supported by data from the US Energy Information Administration. USA They showed that crude stocks rose nine million barrels last week to 527.6 million barrels, below analyst expectations for a 10.6 million barrel increase.
Reflecting the production cuts agreed between OPEC and other major oil producers such as Russia, in what is known as the OPEC + group, the imbalance between oil supply and demand will be halved to 13.6 million barrels per day in May and will continue to decline to 6.1 million barrels per day in June, according to Restad Energy.
“While this may seem like a big improvement from April, the oil market will not magically be solved … the storage problem is still looming on the horizon,” said Louise Dixon, an oil market analyst at Restad, noting that storage space worldwide is rapidly decreasing.
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