Oil market growth continues. Following the trading session on Monday, Brent crude oil additionally recovered by 2.8%, closing the day at $ 38.51 per barrel. Support for prices continues to be provided by a recovery in demand amid softening of quarantine measures, as well as a decrease in oil production by key oil-producing regions of the world.
OPEC and its allies, including Russia, plan to hold a videoconference this Thursday to discuss the extension of previous agreements. Saudi Arabia would like to see a deal to reduce production under the auspices of OPEC + last until August inclusive, however, the latest price increase, as well as a gradual recovery in demand, could be a counterargument for those who are not ready to extend the agreement.
There are similar doubts about Russia, which at the end of last week indicated its unwillingness to limit oil production after June. It is worth noting that the effectiveness of the current OPEC + agreement also raises questions. Recall that the OPEC + countries in April agreed to reduce oil supply by a record 9.7 million barrels per day. The transaction entered into force on May 1 and was designed for 2 months. Under the agreement, OPEC pledged to reduce production by 6.084 million barrels per day compared with the level of October 2018, however, the real reduction last month was only 4.48 million barrels per day. Production in Saudi Arabia, which in April produced a record 11.7 million barrels per day, fell the most. Worst of all were Iraq and Nigeria. The total fulfillment of the terms of the transaction in May amounted to 74%.
Market participants continue to aggressively ignore the apparent deterioration in the fundamental background associated with relations between Beijing and Washington. Bloomberg News reported on the eve that the Chinese authorities ordered to temporarily stop the import of certain types of agricultural products from the United States, including soybeans. Such a move threatens to aggravate the contradictions that already exist between the two countries, and call into question the current and potential new trade agreements. In the event that US countermeasures also concern the agreements of the first phase of the trade agreement, the trade war between the countries will resume with the same force.
Brent SellLimit 39.00 TP 35.10 SL 39.70
Analytical reviews and comments on them reflect the subjective opinion of the authors and are not a recommendation for trading. The author is a trader analyst Artem Deev AMarkets . The social network of traders is not responsible for possible losses in case of using review materials
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