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Jakarta, CNBC Indonesia – Crude contract price futures In the trade on Friday (1/5/2020), it shot up significantly to continue the recovery that occurred this week. The current rise in oil prices coincides with the first day of cuts in oil production by Arabs, Russians, and colleagues better known as OPEC +.
At 09.20 WIB, the price of Brent oil was priced at US $ 26.78 / barrel, 6.02% more than yesterday’s closing position. At the same time, the Uncle Sam, West Texas Intermediate (WTI) benchmark crude oil price also strengthened with a 3.18% rise to $ 19.44 / barrel.
The price of WTI oil has come closer and closer to the psychological level of $ 20 / barrel after falling significantly, even to the point of entering negative territory at minus $ 37.63 / barrel on April 20.
The drop in oil prices came about because in the midst of the Covid-19 pandemic, the flooding of oil supplies became an unavoidable condition as fuel demand fell significantly in line with various efforts to limit mobility. public like social distancing until confinement.
At the same time, world oil producers, such as the Arabs, Russia, and the United States, continue to pump oil production to the market. Although the storage capacity (storage) in several places it is almost full. As a result the balance supply AND demand hesitating and oversupply ensued.
Manufacturers also have to spend money to provide incentives to customers so that they are willing to accept the oil “quota” so that there is nowhere left to store black gold.
The actions of these producers seem in fact ‘suicide’. But if you calculate, the cost of providing incentives to producers is much cheaper than having to shut down production and reopen one day.
The negative price of oil is a phenomenon that occurred for the first time in history. But the thing to remember is that the price of oil that had dropped below $ 0 / barrel is a WTI contract in May that ended on April 21. Now the actively negotiated contract is the June delivery contract.
The price of oil has recovered this week because it has been affected by positive sentiment. First is the plan to reopen confinement especially in European countries that have reported a decrease in the number of new cases of Covid-19. When confinement revoked, there are hopes that the economy will flourish again and oil demand will gradually improve.
The second good news came from Uncle Sam’s country. The US Energy Information Agency. USA (EIA) said that US crude oil inventories. USA For the weekly period that ended on April 24, 2020, they increased by 9 million barrels to 527.6 million barrels. This increase is even lower than analyst estimates that the stock will increase to 10.6 million barrels.
The third good news comes from OPEC +. Today, May 1, the OPEC + agreement to reduce oil production will enter into force. On April 9, 2020, OPEC + agreed to reduce oil production by 9.7 million barrels per day (bpd). This figure is equivalent to almost 10% of world oil production.
Although he still considers himself unable to offset the drop in demand that fell to 30 million bpd, at least this cut is enough to make the market happy again as it is today. “The OPEC + quota will take effect on Friday, this shows the conditions [banjir] Short-term supply is likely to have peaked, “Innes of AxiCorp said.
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(twg / twg)
