A sharp drop in oil prices this week

A sharp drop in oil prices this week: Energy stocks dropped on Tuesday 6th of July 2021,
after a fall in oil prices after many years of reaching high prices.  

Some worry in the market that the OPEC crisis would lead to union dissociation.

OPEC canceled Monday’s minister’s meeting, trying for the third time to reach an agreement to manage oil supplies during the next months.

Changes in oil prices this week

American oil prices reached their highest level in six years, while Brent reached its high level in October 2018.

But on Tuesday B & S’s pointer lowered to 500 after reaching its highest levels every Friday,
also Nasdaq recorded a high price yesterday because of technology stocks.

Energy stocks dropped after recording progress with oil prices in previous times during this week in European stock markets.

In the afternoon also shell and bb company stock lowered by 2% for each in London.

In the USA shell stocks lowered by 0.5% in New York,
but BB company stocks lowered by 2.5% after one hour of stocks trading beginning.

Exxon Mobil stocks were lowered by 4%.

Also, Chevron stocks lowered by  15%, while occidental petroleum stocks lowered by 4%,
and marathon Opel company lowered by 3.1% at 10:30 pm according to the east of united states times.

European pointers dropped on Tuesday afternoon.

Although the FTSE pointer was high in previous time today in London overtaking other European markets during the afternoon.

Oil stocks supported FTSE pointers recording high levels at the beginning of stock marketing.

Investors keep watching stock markets and how the late progress in oil price may lead to inflation,
which would lead by turn to change financing policy by the federal bank stock and other central banks.

South of Sudan getting ready for oil auction

South Sudan is in short of time preparing for the first oil auction.

Administrators declared that the four areas in the country reached their high level of production and began to lower.

 Daniel Chong deputy minister of the oil ministry told Bloomberg that production in groups 3&7 lowered from 120,000 barrels per day to 103,000 barrels per day,
but areas 1,2 and 4 lowered from 53,000 barrels per day to 48,000 barrels per day

In general, pure oil production lowered from 185,000 barrels per day to 165,00 barrels per day.

Now South  Sudan has five producing areas directed by Indian oil and natural gas company
which belongs to the national petroleum Chinese company and Malaysian PETRONAS company.

During last week production restarted in area A5 after stopping for 7 years aiming to produce 8000 barrels per day.

The first licensing auction began on July 22ed in South Sudan, and it will present five areas for licensing.

But PETRONAS says it may not join this auction.

The foreign investment forms a remarkable point for the south of Sudan.

South Sudan’s far-off coast areas are of high importance because almost 90% of it is not discovered yet.

The civil war which lasted for five years had a bad impact on discoveries and delayed opportunities for new discoveries,
and also delayed planning for reaching the same production levels before the war that would reach 400,000 barrels per day.

In 2019 south of Sudan and some other countries that are not members in OPEC,
those who were listed on OPEC list of reducing production declared their first discovery of oil as an independent country
with a capacity of 5.3 million barrels that can be increased but the pandemic stopped progress in production.

Chewing said that covid19 represented challenges besides other dangers, unit production cost is extremely high.

And if we managed not to take control over production costs, profit would be low and we need to fix that thing.

We need to guarantee the profit of oil against oil production costs.

Oman Oil Company is negotiating for collecting 1.5 billion dollar

Administrators told Reuters that (EDO) energy development Oman company is one of government oil companies
that was recently established is negotiating for 1.5 billion dollar debt with banks

One of these resources told Reuters that it’s not predicted for the funding the organization aims to help in financing capital expenditures.

JP Morgan is working with Oman Energy Company on a financing plan.

Also, some banks from the UAE showed interest in joining the financing.

In the last few months, Oman established (EDO) company to keep its share in the biggest area of producing oil in the country.

Block 6 was directed previously by the oil developing authority of Oman supported by the state.

Wood Mackenzie mentioned that block 6 is one of the most important oil and gas operations in Oman,
it contains more than 75% of pure oil stock remaining in the country.

There was a bad impact on Oman as an oil-producing country not a member of OPEC but part of the union when oil prices dropped last year and demand lowered.

Oman is trying to collect extra financing and aims to reduce government expenditures.

The international monetary fund said in previous time this year that Oman suffered from 2020 problems and there was a great loss in Oman economy in 2020.

It is predicted that Oman’s financial deficit would rise to 18% of gross domestic product (GDP)
before it would be narrowed to 7% of (GDP) in 2024

According to Fitch agency credit ratings for December, it warned that Oman is facing big risks in its financial plan in funding and applying.

In April 2021 Bloomberg mentioned that the Oman government is seeking to fill the gap in the budget including the sale of its share in (OQ) company through an Initial public offering.

Some reports mentioned that (OQ) company is looking forward to selling off its corporate assets and make benefits of the international debt market to fund its expenditures that would reach 7.5 billion dollars in the next five years 

 

A sharp drop in oil prices this week

Oil continues to make progress.. West Texas Intermediate is at its highest level since 2014

Oil continues to make progress.. West Texas Intermediate is at its highest level since 2014: Oil continued to make progress today,
following the failure of the OPEC negotiations, as it continued to deliver record performance in the commodity trading market. 

Evest follows everything that’s going on and relays it to you in the following lines.

West Texas crude is at a 6-year high.. OPEC is now going through a crisis

West Texas Intermediate crude prices rose during trading on Tuesday to new highs,
backed by the apparent failure of the OPEC + negotiations, reaching the highest level since 2014.

The cost of the West Texas Intermediate crude barrel exceeded $77.

While Brent crude rose to its highest level since October 2018, at $77.84.

According to experts, countries participating in the cartel must find a compromise.

The failure of the negotiations will lead to an economic conflict over last year’s price war between Russia and Saudi Arabia.

Bloomberg

Bloomberg reports that West Texas Intermediate crude prices are at a six-year high, with August futures closing to $77. 

The Agency believes that the cause was the stalemate in the OPEC + negotiations and, in particular, the position of the UAE.

All this leads to the fact that the market may not depend on increased supplies from August.

Freedom Finance analyst

In addition to the lack of agreements, OPEC+ is fueling oil prices and the policy of the US Federal Reserve System (FRS),
according to an analyst at Freedom Finance. 

According to him, the Fed continues to ignore inflationary risks and advocates a super-accommodative monetary policy. 

The expert explained that “this is reflected both in the updating of the historical rises
by the American indicators and in the increased speculative element of West Texas Intermediate and Brent crude prices.”

OPEC experienced a boom in 2020, but conflicts are unavoidable. 

Members of the organization discussed the nuances in restoring production during the week
but were unable to persuade the UAE to sign under the new schedule. 

This led to the fact that the big OPEC + deal, which determined the fate of the oil market for five years in a row, was in danger again.

OPEC member countries are trying to agree on a common position on restoring oil production by the end of 2022.

After that, they will present the document at the OPEC + meeting, where Russia will participate in the negotiations. 

There was hope for a common position on July 5,
but the OPEC + meeting scheduled for Monday evening was canceled,
and a new date was not even announced.

UAE position

The negotiations stalemate is due to the position of the UAE.

The country called for an increase in shares for itself.

The UAE has not been persuaded in a week. 

According to Bloomberg, the UAE usually follows the Saudi position.

Now, UAE, which announced in autumn 2020 its intention to invest $122 billion in increasing oil production through 2030,
has called for an increase in its share within the organization from 3.2 million to 3.8 million barrels.

The UAE is trying to negotiate new terms as quickly as possible because of Iran, which might agree in the near future to a new nuclear deal
with Joe Biden’s administration and return to the oil market. 

In accordance with the current agreement, all OPEC + participants can review the base level of production no later than the expiration date of the document.

Financial Times

The talks, according to the Financial Times, could be resumed at any time,
but in the “Saudi-Russian camp” after the meeting ends,
they say the meeting was not postponed, but rather canceled. 

Meanwhile, information is circulating from the UAE side that Saudi Arabia and Russia are considering the UAE proposal,
and until this time the negotiations have been postponed.

According to a key NATO delegations source to the news agencies,
informal negotiations take place every day, and the negotiation process itself does not stop. 

Yesterday, the source said, both the OPEC leadership and key market participants – Russia and Saudi Arabia – contacted the parties
to the agreement at night, and various options were being worked on. 

It is hoped that a consensus will be reached, because “this is a common market,
common problems and must be resolved,” according to the source.

The source did not rule out a cartel meeting at the end of the week.

Iraqi Oil Minister

Iraqi Oil Minister Ihsan Abdul-Jabbar said on Sunday that he expects the next meeting to be announced in 10 days.

He indicated that he does not want a price war and an increase in oil prices above the current level while supporting the extension of the current meeting
until the end of 2022 and a gradual increase in oil production.

If exporters do not agree in the near future, this could lead to a sharp jump in oil prices.

Now there is a Deportation in the oil market: The price of current futures is higher than the price of subsequent futures. 

The difference in cost is now $5 – a level rarely seen in the market over the past 20 years.

Deportation means that traders are interested in selling goods at the moment, and financial investors prefer to fill positions.

In a conversation with Bloomberg, Neil Quilliam, a researcher at the British analytical center Chatham House, did not rule out the UAE’s withdrawal from OPEC, “if its requirements are not met.” A key source indicates that the issue of the UAE’s withdrawal from the deal is “not worth it.” He added that the negotiation process was “difficult, but decisive.”

Asian stocks mixed 

The Nikkei 225 index on the Tokyo Stock Exchange fell by about 1% to 28366 points.

On the other hand, the Shanghai Stock Exchange performed well with an increase of 0.67%.

Hong Kong lost 0.85%,

Sydney 0.76%, and Seoul 0.65%. 

Wall Street also saw a mixed performance yesterday, with the Dow Jones index falling by 208.98 points to 34.577.37
and the Standard & Poor 500 losing 0.2% to 4.343.54, cutting a 7-day bullish trajectory. 

The Nasdaq composite index closed at a new record high of 0.17% to 14663.64 points. 

 

Oil continues to make progress.. West Texas Intermediate is at its highest level since 2014

Upcoming OPEC meeting.. The Japanese stock market is in the red zone

Upcoming OPEC meeting.. The Japanese stock market is in the red zone: Today marks a new meeting of OPEC +,
which is expected after recent negotiations failed to reach an agreement. 

Evest follows with you all the developments that are taking place in the commodity trading market and keeps you informed.

Oil prices are stalled pending today’s OPEC decision

Oil prices stalled in the short term as the UAE objected to the current OPEC + proposal, led by Russia and Saudi,
its allied neighbor, to increase their combined production by 400 thousand barrels per day from August.

The price of Brent oil barrels, which rose to $76.43 on Friday, ended the day at $76.17.

The Brent oil barrel traded at $76.22, up 0.07 percent from the closing of 09.25 today.

In the same minutes, West Texas Intermediate crude oil found buyers at $75.20 per barrel.

Markets focused on the meeting at which the Organization of Petroleum Exporting Countries (OPEC) and the OPEC Group,
made up of some non-OPEC oil-producing countries,
would discuss the decision on production policy to be implemented from August.

The decision meeting was postponed until today, as the group was unable to reach an agreement
at meetings held for two consecutive days on July 1-2, causing price fluctuations.

At the talks on Thursday and Friday, the proposal to increase oil production by 400 thousand barrels per month from August to December,
and to extend the current cut-off agreement until the end of 2022 was supported by a majority of members States. 

the objections of the United Arab Emirates

An agreement was reached based on the objections of the United Arab Emirates and is reportedly unavailable.

The UAE reportedly opposed the proposal because of its desire to “increase the share of production.”

The energy and oil ministers of the 13-nation OPEC led by Saudi Arabia and 10 non-OPEC oil-producing countries
led by Russia continue their 18th ministerial meeting today.

At the 15th ministerial meeting on April 1, the group decided to gradually increase daily oil production for May, June, and July.

The Saudi Arabia announcement 

On the other hand, Saudi Arabia announced that it will gradually lift the decision to reduce the additional 1 million barrels per day,
announced in February and voluntarily implemented.

Recently, the production schedule was in excess of 0.4 million barrels per day in a monthly increase until December.

At this value, the market is likely to still undersupply in the second half of the year.

The result will be a further increase in oil prices. 

In this case, only a new nuclear agreement with Iran including the lifting of U.S. sanctions or another wave of Corona with large-scale movement restrictions could prevent the increase.

On the other hand, uncertainty in demand caused by new types of COVID-19 variants continues to strain prices.

While the rapid spread of the Delta variant around the world is raising concerns about a new wave,
quarantine measures were taken again in many countries and travel restrictions on the agenda are again negatively affecting oil demand expectations.

Why is the UAE standing in the way of OPEC’s decision on production in August?

The UAE government does not oppose increased production but wants to adjust its production share within the cartel upward.

By increasing its record share, Abu Dhabi could increase its oil production,
but this would reduce production shares in other member countries.

Negotiations will continue for the third day on Monday. Aside from these discussions,
the day must be relatively quiet given the absence of American traders due to the public holiday.

OPEC has done a very good job of asserting its interests over the past few months.

But now the opposition within the coalition is affecting the way things work.  

The negative views of consumers are certainly not a critical topic within OPEC.

However, the slow increase of 0.4 million barrels per day has a strong and stubborn critic in the form of the United Arab Emirates. 

The UAE oil minister insists they be allowed to deliver more oil.

This can be done by adjusting shares, increasing overall funding, or ending mutual commitment in April 2022 at the latest.

The reason for progress in the development of productive capacities, one-third of which is currently disabled.

After two days of failed negotiations last week, the OPEC coalition’s oil ministers will try to make a decision today.

There were no rumors of any hint of success. That’s why it remains interesting.

Oil prices are likely to turn one way or the other unexpectedly.

Negative trading in Tokyo

East Asian stock markets showed no steady trend at the beginning of the week on Monday.

But the decline was obvious in Tokyo and Hong Kong. 

In Tokyo, the Nikkei 225 index lost 0.6 percent to 28598 points.

In contrast, indicators have barely moved elsewhere in the region and also in Sydney.

The Caixin Purchasing Managers’ Index of China’s services industry fell compared to the previous month. 

In the United States, Dow & Co grew after creating more new jobs in June than expected.

However, due to the simultaneous development of moderate wages, market interest rates showed no upward reaction;
On the contrary, it has fallen somewhat, which has been positively received in stock markets.

As a negative factor in Japan, market participants pointed to the yen,
which rose to 111.12 from about 111.60 against the dollar compared to the same time on Friday. 

The dollar was said to suffer from low market interest rates.

The latter is also the cause of weak stocks in the financial sector,
especially since the Japanese 10-year yield fell slightly.

 

Upcoming OPEC meeting.. The Japanese stock market is in the red zone

OPEC meeting failed.. Oil awaits the second session of the negotiations

OPEC meeting failed.. Oil awaits the second session of the negotiations: The price of crude oil stagnated at the end of last week’s trading after it was corrected
at the beginning of the week after a meeting between OPEC + oil-exporting countries that had not come to a joint agreement

West Texas Intermediate crude rose slightly this week by 1.49% to the US $75.16 per barrel.

In the meantime, Brent crude declined by 0.01% to $76.17 per barrel.

OPEC Meeting

The ministers of the oil-exporting countries in OPEC Plus (OPEC +) held a meeting last Friday.

During the meeting, it was founded that there was no common ground that could be agreed on whether oil production should be increased or temporarily reduced.

According to CNBC International, this is known to have happened after a disagreement from the UAE,
which wants an increase in production until next year while other OPEC + members disagree.

Sources say that some OPEC + members have already approved the increase. But they just want an increase until December 2021, not until next year.

“The OPEC alliance agreed in principle to increase supplies by 400 thousand barrels per day from August to December 2021 to meet the growing demand,” a source told Reuters.

At the latest, Saudi Arabia’s leading OPEC player in OPEC and non-OPEC Russia are said to have proposed extending the cuts period from early 2022 to the end of next year.

Moreover, OPEC + ministers are said to try to negotiate again tomorrow, Monday.

Performance of oil prices

At the end of the week, Brent crude rose 33 cents to the US $76.17 per barrel after rising 1.6% in the previous session.

West Texas Intermediate crude fell 7 cents to the US $75.16 per barrel.

West Texas Intermediate crude prices posted 1.5% gains for the week, as the US crude market is expected to tighten with refineries reopen to meet recovering gasoline demand.

According to energy services company Baker Hughes, U.S. energy companies added five oil and gas rigs to 475 in the week ending July 2, the highest level since April.

At the same time, Brent oil prices have been stable as the market has been concerned about fuel demand in many parts of Asia,
where cases of Delta Cofid- 19 are on the rise.

Citi analysts said they do not expect West Texas Intermediate crude to rise above Brent crude
as they expect U.S. oil production to increase by the end of 2021 and further growth in 2022.

The dollar near two-month highs also put pressure on oil prices, making the commodity more expensive for buyers in other currencies.

Can OPEC fulfill its plan?

Currently, OPEC +’s plan to increase production in the last months of 2021 is facing a problem. At the July 1 meeting,
the OPEC+ alliance nearly reached an agreement to increase production by 400 thousand barrels per day on a monthly basis from August to December of this year.

However, near the last minute, the UAE protested and asked the oil syndicate to adjust its boundaries.

Louise Dixon, the oil market analyst at Restad Energie, said that if the OPEC + alliance breaks up and collapses,
the oil market could fall into a similar price decline as when Russia left OPEC at the March 2020 meeting and cause a price war.

It is not the traditional rivalry between Russia and Saudi Arabia that would have failed in the negotiations,
but rather the demands of the United Arab Emirates.

The 23 OPEC + countries

The 23 OPEC + countries, led by Saudi Arabia and Russia, once again failed to reach a consensus on their crude oil production quotas as of August,
following the first stalemate in negotiations the previous day.

Therefore, the Organization of Petroleum Exporting Countries (OPEC) and its allies postponed their talks, which began on Thursday,
until Monday, which were initially scheduled to be completed in one day,
as the organization announced in a statement sent to Agence France Presse.

This time, it was not the traditional rivalry between Moscow and Riyadh that changed the course of negotiations:
The United Arab Emirates will be responsible for the failure of the summit,
according to the comments of market observers.

Abu Dhabi had renewed its request from the previous day,
an upward revision of the benchmark production volume,
which serves as the basis for calculating its share.

Eugene Weinberg, an analyst at Commerzbank, explains that this threshold adopted in October 2018 is outdated by the Emirates,
which claims “higher capacity (production) now.”

Ole Hansen, an analyst at Saxobank, said that if 3.17 million barrels per day were adopted,
the UAE minister would insist that it be “raised to 3.8 million barrels per day.“

The plan on the table

However, the OPEC + producing countries had a plan on the table,
which is to increase oil production by 400 000 barrels per day between August and December,
or even later, according to analysts’ expectations.

This strategy is part of OPEC’s approach and policy since May:
Gradually re-increasing production of black gold after being severely tightened
at the beginning of the pandemic in the face of moribund demand.

With some price success, from the seller’s point of view: Crude benchmarks, Brent and West Texas Intermediate,
are hovering around $75, a remarkable 50% increase since January 1, and unprecedented.

At the beginning of June, the Group had already chosen caution, the preferred term for Saudi Energy Minister and de facto leader of the Alliance Abdulaziz bin Salman,
registering for July an increase of a similar percentage (+ 441000 barrels per day) compared to the previous month.

The alliance still has 5.8 million barrels left voluntarily underground every day.

Uncertainty about supply and demand

The task is not easy for the Alliance, which must take into account the many uncertainties
surrounding both supply and demand for crude oil.

On the other hand, high prices displease consumer countries, including India,
an argument for increased production.

But on the other hand, the spread of the highly contagious delta form of Covid-19,
which is driving many countries to develop new measures to restrict the movement of goods and people,
has become a major impediment to black gold consumption

 

OPEC meeting failed.. Oil awaits the second session of the negotiations

Markets are looking forward to the OPEC meeting.. A positive start for European markets in the second half of the year

Markets are looking forward to the OPEC meeting.. A positive start for European markets in the second half of the year:

The second half of the year begins today, in anticipation of OPEC + ministerial meeting, which may set the price path during at least this and the next sessions. 

Evest follows developments in the commodity trading market in the following lines:

Oil stays in a calm situation so far.. waiting for the results of the OPEC meeting

U.S. West Texas Intermediate crude oil traded below $74 per barrel on Thursday morning,
while waiting for the OPEC + decisions that we will know after Thursday’s periodic meeting next week. 

The market is now focused on the right balance between supply and demand,
and it may appear that the market has already priced in a significant increase in production by the group.

The price of West Texas Intermediate crude listed on the U.S. NYMEX Stock Exchange fell 0.29% to $73.68 on Thursday morning.

In another quiet session, prices were close to $74 per barrel.

Meanwhile, Brent crude rose by a modest 0.13% to $74.74 on Thursday morning.

At a trading session on June 30, world oil prices rose after U.S. crude inventories fell for the sixth week in a row and a report by the Organization of Petroleum Exporting Countries (OPEC) predicted that the oil market would be undersupplied this year.

Brent North Sea crude for August delivery rose

At the conclusion of this session, the price of Brent North Sea crude for August delivery rose 37 U.S. cents, or 0.5%, to $75.13 a barrel, while Brent North Sea crude for September delivery rose 34 U.S. cents to $74.62 per barrel. In the meantime, U.S. light crude rose 49 cents, or 0.7%, to close at $73.47 per barrel.

Over the past six months, the price of West Texas Intermediate crude has risen by 51.4% – the last time we saw such a range of half-year increases in 2009.

The period from the beginning of April to the end of June was also the fifth quarter of growth in a row. Overall, this 15-month period had a very impressive increase of over 265%.

the American Petroleum Institute

Data released Wednesday evening by the Energy Information Administration confirmed preliminary estimates announced by the American Petroleum Institute the previous day.

United States crude oil inventories fell by 6.7 million barrels, again exceeding the expectations of analysts, who, on average, had expected a fall of 4.7 million barrels. This is the sixth bearish reading which in a row, could indicate a healthy economic situation in the oil industry and a recovery in demand.

In just one week, the OPEC + meeting will be held on Thursday, when the group’s member countries will discuss a plan to increase production from August. 

According to analysts, the Cartel may release up to 550 thousand barrels of oil per day as of next month, or up to 10% of current production cuts.

Goldman Sachs

However, even this figure may be insufficient to curb the further rise in raw material prices.

Goldman Sachs believes that only an increased supply by OPEC+ can curb the upward trend.

An internal OPEC report stated that the oil market is expected to be short-lived,
but there may be an oversupply once the group’s production reduction agreement expires.

OPEC Secretary-General Mohamed Barkindo recently said that oil demand is expected to grow by 6 million barrels per day in 2021,
while Goldman Sachs’s expectations exceed 2.2 million barrels per day, exceeding the supply of 5 million barrels per day.

On the other hand, a recent Reuters survey showed that the average price of Brent crude is expected to be $67.48 per barrel this year,
while the average of West Texas Intermediate crude is expected to be $64.54 per barrel.

Both prices are close to their recent highs in 2018. This is the seventh month in a row of price gains in the last eight months,
with gains of 10% for West Texas Intermediate crude and more than 8% for Brent oil.

A positive start for European markets at the beginning of the second half of the year

European markets are experiencing a promising start,  despite concerns about the prevalence of the delta-covid-19 variant.

Gains range from 0.43% in Brussels to 0.7% in Amsterdam.

While the Euro Stoxx 50 index rose by 0.76%.

Investors will have a lot to do on Thursday with the deployment of the Purchasing Managers’ Index and ISM manufacturing indicators on both sides of the Atlantic, and the OPEC Ministerial Meeting and its allies (OPEC +) or even the President’s inaugural address from the European Central Bank, Christine Lagarde, to the European Parliament’s Committee on Economic and Monetary Affairs.

Asian markets on the other side.. experiencing a negative start

Asian stock markets are mostly declining today, Thursday, as investors continue to worry about the course of the COVID-19 pandemic
and wait for closely watched monthly employment figures in the United States.

In Tokyo, the Nikkei lost 0.49%, while the Japanese capital recorded a significant number of new infections on Wednesday since the end of May.

Bloomberg reported experts as saying: “Even if the vaccination dissemination is progressing,
with a delta variant, the pandemic situation is still serious in Japan.”

However, the quarterly Tankan sentiment index, released on Thursday by the Bank of Japan,
showed a further improvement in the morale of large Japanese manufacturers, but slightly lower than expected.

Elsewhere in Asia, Hong Kong declined by 0.6% and Shanghai is barely equalized.

In China, the Caixin-Markit Manufacturing Managers Index fell more than expected in June to 51.3,
after 52 in May, while the Reuters consensus gave it to 51.8.

US oil inventories continue to decline for the sixth week in a row

US oil inventories continue to decline for the sixth week in a row: Yesterday, Tuesday, June 29, 2021,
the American Petroleum Institute (API) announced that US crude oil inventories decreased by 8.153 million barrels for the week ending June 25.

Analysts had expected a decline of only 4.686 million barrels during the week.

In the previous week, the American Petroleum Institute announced that oil inventories decreased by 7.199 million barrels after analysts had expected a decline of 3.942 million barrels.

Crude oil inventories have fallen by more than 37 million barrels since the beginning of 2021, but are still up by 19 million barrels since January 2020.

The API also announced that gasoline inventories increased by 2.418 million barrels for the week ending June 25 (in addition to an increase of 959 thousand barrels in the previous week). Analysts had expected a decline of 886,000 during the week.

Distillates saw an increase in inventories this week of 428,000 barrels during the week,
in addition to last week’s increase of 992,000 barrels.

Cushing inventories fell this week by 1.318 million barrels. 

Weekly oil prices

Oil prices rose on Tuesday after prices fell on Monday as OPEC prepares to meet to discuss the production.

Midday, before the data was released – West Texas Intermediate (WTI) crude was trading up $0.36 (+0.49%) to $73.27,
an increase of only $0.20 a barrel during the week.

The benchmark Brent Crude is also trading up on the day at $74.96 – so flat for the week.

At the end of the day, after the data release.

West Texas Intermediate is trading at $73.43 and Brent crude is trading at $75.14 a barrel. 

Weekly oil production rates

With crude oil inventories continuing to decline for the sixth consecutive week, US oil production also fell to an average of 11.1 million barrels per day for the week ending Friday, June 18, according to the latest data from the Energy Information Administration.

This represents a daily decrease of 100,000 barrels from the previous week

Oil demand recovers in India

Newspaper reports indicate that Indian demand for fuel has begun to improve as states begin to ease shutdowns and start raising operating rates for refineries.

The Argus report included Indian Oil Minister Dharmendra Pradhan saying that economic activity has also improved during the past three weeks,
which helped increase demand for fuel.

Some officials in the oil sector see the possibility of a recovery in fuel demand to pre-pandemic levels, by the end of 2021.

Citing informed sources, Argos published an increase in the operating rates of refineries in state-owned companies by between 3% and 10%,
adding that the increase was due to the increase in prices at the pump.

Through the movement of refineries, it is expected that demand rates will continue to rise in the coming weeks despite the continued activation of restrictions on movement and concern about a new type of virus called Delta Plus.

sharp increase in COVID-19 cases

Last month, India suffered a rapid and sharp increase in COVID-19 cases, which led to a widespread shutdown that affected fuel demand.

And Argus published in a previous report that consumption of gasoline only decreased by 19% during the period from April to May,
as the demand for diesel decreased by 1/5 in this period.

OPEC warned at that time that demand in India was the main impediment to lower expected global demand growth than it was in the quarter.

India is a major importer and consumer of crude oil, and one of the most vulnerable to price hikes.

OPEC has been calling a lot for more barrels to be brought back into global supply since demand started picking up, causing prices to rise.

Pradhan called on OPEC to phase out last year’s self-imposed production cuts in a virtual meeting on Monday with OPEC Secretary-General,
Mohammad Barkindo, as they discussed recent developments in the oil market, trends in oil demand recovery,
economic growth prospects, and overcoming energy challenges.

Russia’s Efforts to Increase Oil Production

Reuters reported that Russia is facing difficulty in increasing oil production after its commitment to reduce oil production under its agreement with OPEC.

 Russia produces about 10.42 million barrels per day of crude oil and distillates since the beginning of this month,
which is lower than the average production in May of 10.45 million barrels per day.

Some specialists told Reuters that the reason for the decline may be related to the difficulty of increasing production in the old fields.

There was talk of such difficulties at the beginning of last year when OPEC first agreed to take about 7.7 million barrels per day out of the market in response to the demand destruction caused by the pandemic.

Bloomberg

Speaking to Bloomberg in May 2020, the CEO of the oil industry, Evgeny Kolesnik,
said that the mass shutdown of oil wells is something much more dangerous than a gradual reduction.

He also said that under Russian climatic conditions, after a prolonged well shutdown is never
expected to pump production at the same levels as before.

In the beginning, the report indicated that when Russia joined OPEC members in their efforts to control production,
its oil companies reduced a relatively small part of production slowly and for only a few months. In 2020,
these companies are being asked to run much deeper, much faster, and much longer.

With this long production suspension, it is possible that some wells will not be able to restart.

The longer a well is shut off, the greater the potential for pressure changes,
as well as water content changes capable of rendering the well unusable again.

OPEC meets later this week to discuss these steps in the production control agreement.

Early reports said the organization was considering bringing additional supplies online
from August in response to the rapid recovery in demand.

Oil is declining for the second session in a row.. And tourism stocks losses due to Delta variant

Oil is declining for the second session in a row.. And tourism stocks losses due to Delta variant:
Today brings unpleasant surprises of trading instruments in the commodity market, or stock trading market,
where the delta variant of Covid-19 virus and its high prevalence seems to have affected trading traffic,
and forced oil to trade in the negative zone for the second day in a row.

Evest follows all this and more in the following report.

Oil continues to decline for the second session in a row

The price of West Texas Intermediate crude fell Tuesday morning for the second session in a row amid growing concerns about the prevalence of the pandemic after the Delta strain. 

As a result, new disease outbreaks have emerged in many places and restrictions have been re-imposed.

The price of West Texas Intermediate crude listed on the U.S. NYMEX Stock Exchange fell 0.14% to $72.81 on Tuesday morning.

Although the day before it was at its highest level since October 2018 above $74.40. 

West Texas Intermediate crude oil prices are targeting a closure of the second quarter of 2021 at an increase of nearly 23%.

This is the fifth three-month growth period in a row.

Brent crude

Meanwhile, Brent crude fell on Tuesday by 0.86% to $73.94 per barrel, after Monday brought in sales of more than 2%.

After setting new records in more than two and a half years during the Asian session, crude prices fell again on Monday, June 28,
weighed by the prevalence of delta variant as the highly anticipated OPEC+ peak looms.

The price of the North Sea oil barrel for August delivery ended at $74.68 in London, down 1.97% or $1.80 from Friday’s closure. 

In New York, West Texas Intermediate crude for the same month lost 1.54% or $1.14 to $72.81.

Brent and West Texas Intermediate approached $76.60 and $74.45 earlier today, the first since October 2018, before declining again.

All investors are focused on next week’s OPEC + meeting, where group members will discuss a plan to ease ongoing production constraints to varying degrees from May 2020.

Analysts are divided over the scope of OPEC’s release of supplies.

Basically, there are two expectations: Production increased since August by a total of 250 thousand barrels per day or 500 thousand barrels per day.

According to OCBC experts, OPEC could increase production by 250 thousand barrels per day since the beginning of August.

If not, then we can see that Brent crude hit $80 a barrel next month.

As for ING experts, they expect that OPEC will increase supply by at least 500 thousand barrels per day.

Delta strain

Owing to the prevalence of the Delta strain, Spain and Portugal, two of the most popular European tourist nations, have imposed new restrictions.

Some are targeting unvaccinated Britons.

UK citizens are also finding it more difficult to travel to the US,
and talks on a plan to allow travel between these countries are currently on hold, Reuters reported.

This evening, we’ll get an estimate of the change in the level of crude oil reserves from the American Petroleum Institute,
which will give some hint of the current demand for the crude. 

The previous five consecutive readings showed a contraction in inventories,
each time surprising analysts who underestimated the extent of the fall.

According to some experts, the prospects for a recovery in oil demand this summer may be significantly exaggerated,
especially as the delta variant has affected Europe, and the prevalence of the virus in South-East Asia and Australia has caused further closures.

On the other hand, it seems unlikely that the United States will lift sanctions against Iran in the near future.

France called on Tehran yesterday, Monday, to restore “immediate” and “full” access to its IAEA positions,
while an interim settlement between the parties ended on June 24. 

This question is part of the broader framework of the ongoing talks to try to salvage the 2015 International Iranian Nuclear Agreement concluded in Vienna
but breached in 2018 by the withdrawal of the United States.

For oil investors, the question is whether the sanctions that currently prevent Iran from exporting its production will be eased,
which would significantly alter the black gold market’s balance and could affect prices.

Dax index in the negative zone 

The fear of a delta variant prevalence and renewed restrictions as well as the reluctance to read the U.S. Labor Market Report on Friday slowed down the Dax index yesterday.

The German leading index started the day amicably The DAX index is currently trading at 15643 points, about 0.6% higher than the previous day’s closing price.

Currently, there’s very little movement in the DAX index.

Technically, the German benchmark index is going through a side phase. 

On the one hand, the upward line of resistance at 15680 points, on the other hand, the two all-time peaks at 15.733 / 15806 points are blocking the road upward. 

On the downward side, the DAX is strongly supported.

In addition to the upper trend channel line at 15473 points currently, the 55-day ascending EMA line at 15375 points,
and the upper edge of the previous trading range at 15369 points to the southern hedge.

Tourism stocks are the loser because of the delta variant

Especially since the already suffering tourism industry’s stocks were among the losers yesterday.

This has led to concerns about possible rolling travel restrictions.

Summer months are particularly important for tour operators, hotels, and airlines.

But the United States labor market report scheduled for Friday also causes restraint despite today’s prices hike.

The focus is likely to be on wage costs. If these continue to rise, inflation fears may arise again.

 

Oil is declining for the second session

Negative beginning of the week for oil and Asian indices

Negative beginning of the week for oil and Asian indices: Today begins a new week, which seems to be full of surprises,
as oil seems to be declining slightly, along with some Asian indices. 

Evest follows what is happening in the commodity trading market,
and relays them to you in the following lines:

Oil is stable today

Oil prices stabilized today, Monday, with crude oil traded on the New York Fuel Exchange at a stable level near the U.S. $74 a barrel, five weeks after the prices hike. 

The price of a barrel of West Texas Intermediate crude oil for August delivery on the New York Fuel Exchange is $74.04, down 0.01 percent.

Brent crude oil for August delivery is trading on the ICE Futures Europe Fuel Exchange in London at $76.14 a barrel, down 0.05 percent.

at the meeting scheduled for July 1, OPEC + countries will assess the situation in fuel markets and determine the volume of oil supplies.

The alliance will announce an increase in its oil supply, but analysts think it will not be a sufficient increase in supply to keep pace with the recovery in global demand.

Bloomberg’s analysis shows that OPEC + could increase crude oil supply by 550 thousand barrels per day in August.

However, this represents only a quarter of the world oil supply deficit.

Vandana Hari, the co-founder of Vanda Insights Consulting, says: “While OPEC + is likely to decide to increase oil production by just over 550 thousand barrels per day, this level is unlikely to be significantly exceeded.”

He adds: “OPEC + does not want to threaten the continued rise in oil prices, and Saudi Arabia appears to be wary about recovering demand.”

world powers’ talks with Iran on renewing

In the meantime, world powers’ talks with Iran on renewing the 2015 nuclear agreement may get complicated after U.S. airstrikes on the Iraqi-Syrian border.

The London-based Syrian Observatory for Human Rights reported on Monday morning that after the airstrikes,
at least five fighters from the Iran-backed militias were killed.

The United States Department of Defense (Pentagon) said on Sunday that Iranian-backed factions were attacked on the Syrian-Iraqi border in response to drone attacks on US personnel and facilities in Iraq.

According to the United States Department of Defense,
US airstrikes targeted operational facilities and weapons depots in two locations in Syria and one in Iraq.

According to the Pentagon

According to the Pentagon, militias have used these facilities to launch unmanned aerial attacks against United States forces in Iraq.

The attacks were carried out on the orders of President Joe Biden,
who ordered retaliatory strikes against pro-Iranian militias for the second time since he took office.

The Iranian Speaker of the House of Representatives,
Mohammad Bagher Ghalibaf had previously announced that Tehran would never provide the International Atomic Energy Agency (IAEA)
with photographs from inside some Iranian nuclear facilities because the IAEA control agreement had expired.

At the end of the previous session, the price of West Texas Intermediate crude on the NYMEX rose by 1.0 percent.

Since the beginning of this year, West Texas Intermediate crude has risen by more than 50%,
with the rapid recovery in demand in energy markets after COVID-19.

Including, in the United States, China, and Europe, which led to increased mobility and increased consumption of transportation fuel.

The world’s economic boom has also contributed earlier to the elimination of large oil reserves in the past. 

Oil rose above $75 last week, for the first time in more than two years, as global demand continues to recover. 

Cautious trading in Asia

Asian exchanges start the week cautiously on Monday ahead of upcoming Chinese economic data and because of the high incidence of the coronavirus in Asia. 

Sydney, Australia’s most populous city, is under closure for two weeks after an outbreak of a highly contagious delta species,
Indonesia is experiencing a record number of infections, Malaysia can extend its closure,
while Thailand has announced new restrictions in Bangkok and other provinces. 

Investors in Asia are closely watching official figures from China expected for Wednesday.

According to experts

the value of the manufacturing sector must fall from 51 to 50.7. The Caixin Index for private sector manufacturing PMI will be followed later in the week.

The Nikkei index, with 225 companies, fell 0.3 per cent at 28985 points.

The broader Topix index remained unchanged and reached 1962 points. Shanghai Exchange has not changed.

The index of the most important companies in Shanghai and Shenzhen rose 0.1 percent.

German Dax is stable

After a strong past week, German stock market investors took it easy on Monday. 

The leading German DAX index started trading on Monday morning at 15600 points and has not changed. 

Its record of 15802 points is still in sight.

The MDax average stock market index settled at 34450 points.

While EuroStoxx 50, the eurozone’s main indicator, lost about 0.1 percent.

positive performance in Wall Street

Wall Street’s major indices added their latest gains on Friday.

The S&P 500 index, which represents the broad market, reached another record high and benefited from the rapid rise in Nike stock prices, among other things. 

The sporting goods manufacturer-provided surprisingly strong quarterly figures.

Recent progress in the struggle for large-scale investments in American infrastructure,
seen as a sign of the recovery of the American economy, also continued to have a positive impact.

The S&P 500 index rose 0.33 percent to 4280 points.

The leading Dow Jones industrial index in the United States rose by 0.69 percent to 34433 points.

On a weekly basis, there’s an increase of 3.44 percent.

The tech-heavy Nasdaq 100 index fell 0.14 percent to 14345 points on Friday.

 

Negative beginning of the week for oil

The fifth positive week in a row for oil.. OPEC meeting had a key role

The fifth positive week in a row for oil.. OPEC meeting had a key role: World oil prices rose to their highest level since October 2018 at the June 25 session.

As such, both standards rose for the fifth week in a row amid expectations that demand growth will surpass supply in the coming period.

In addition, the market also expects the Organization of the Petroleum Exporting Countries (OPEC) and major non-OPEC producers (also known as the OPEC+ group) to be more cautious in continuing to increase production from August.

Brent crude futures rose 62 cents (or 0.8%) to $76.18 a barrel, while U.S. light crude (WTI) rose 75 cents (1%) to $74.05 a barrel.

This is the highest closure for both benchmarks since October 2018.

Oil performance in a week

Overall, the global oil market continued to have a “great” week with 4 sessions of gains and one slightly diminished session.

With the opening of the new week on June 21, world oil prices rose by about 2% as talks on ending US sanctions on Iran stalled and the dollar slipped from its highest level in two months.

In addition, oil prices have also recovered against the backdrop of expectations of limited growth in U.S. oil production,
making OPEC more likely to dominate the market in the short term before shale production increases sharply.

World oil prices declined

World oil prices declined slightly on June 22 after Brent crude rose above $75 per barrel for the first time in more than two years.

OPEC + sources said on the same day that the group was discussing gradually increasing oil production from August 2021, but had not yet decided on the exact amount.

OPEC + is returning 2.1 million barrels of oil to the market every day from May to July 2021,
as part of a plan to phase out last year’s production reduction agreement as the COVID-19 pandemic hit the market.

On June 23, the price of Brent oil rose above $76 per barrel and at the highest level since the end of 2018,
after data showed a fall in U.S. crude inventories as travel activity increased.

World oil prices

World oil prices traded on June 24 near their highest level in nearly three years,
following reports of U.S. oil inventories falling to their lowest level since March 2020 and an increase in German economic activity.

Concerns about the future of the Iranian nuclear agreement, which could end U.S. sanctions on Iranian oil exports,
have also helped boost energy markets.

With gains of about 1% in the last session of the week of June 25, both benchmarks gained over 3% for the entire week.

According to analysts, crude oil prices rose due to improved demand expectations, as well as expectations that the market will continue to tighten as OPEC + is likely not to increase production sharply at the next meeting.

Upcoming OPEC meeting

OPEC + meeting had a key role on July 1 to discuss the further easing of production cuts from August 2021.

According to experts, OPEC has considerable scope to boost supply without a significant impact on oil stocks,
amid expectations of a more rebounding demand.

In terms of demand, the main factors that OPEC + has to take into account are the strong growth momentum in the United States, Europe, and China thanks to the deployment of the COVID-19 vaccine and the reopening of economies.

 

Analysts say these factors have partially offset the rise in new COVID-19 cases in many other places
and affected gasoline demand in those areas.

In addition, the U.S. is less likely to lift sanctions on Iran and help it increase its oil supply.

A United States official said that the two sides still had serious contentions on a range of issues regarding Tehran’s compliance with the 2015 nuclear agreement.

Impact of pandemic decline

The decline of the pandemic and the resumption of the world economy have led to increased demand for crude oil, gasoline, diesel, and kerosene.

According to the French Federation, the coexistence of the tourism industry is one of the factors driving prices up.

A current risk factor for the economy is the delta mutation of the coronavirus, where it could lead to a return of closure.

Higher prices could boost shale oil producers.

The U.S. hydraulic fracking industry has long been a correction of the commodity market and has expanded production as prices rose. 

The last time we have witnessed this was in 2014.

At the time, oil had reached $100 a barrel, and U.S. hydraulic fracking companies had a quick end to the market.

Iran is the risk factor

OPEC countries, led by Saudi Arabia and Russia, can benefit from climate policy in the West.

It’s clear that if they are willing to interact with increased production in response to the increased demand.

 Following the election of the conservative cleric Ebrahim Raisi as President of Iran, there are few possibilities that the country will move in a direction that will lead to the swift abolition of U.S. sanctions.

The decline in the number of US oil rigs

The number of oil exploration rigs, which is an indicator of the outlook for the oil industry and the production of short-term crude oil in the U.S., fell by 1 this week.

According to weekly data released by the oil field service company Baker Hughes,
the number of oil rigs in the United States fell by one to 372 per week from 19 to 25 June, compared to the previous week.

The number of oil rigs in the country increased by 188 last year.

 

The fifth positive week in a row for oil

Oil continues to rise and a new surge on European exchanges

Oil continues to rise and a new surge on European exchanges: U.S. oil inventories retreated dramatically for the fifth week in a row,
paving the way for oil prices to resume the bullish wave, and continued profit.

Evest follows what happened in the commodity trading market through the following report.

US oil inventories decline for the fifth week in a row supports oil prices

Oil prices rose today, Thursday, against the backdrop of declining inventories according to the U.S. Energy Information Administration,
as well as growing doubts about a future nuclear deal with Iran.

The price of London Futures Exchange Brent crude futures in August reached $75.29 a barrel,
$0.13 (0.13%) higher than the closing price of the previous session.

The price of West Texas Intermediate crude futures in August in electronic trading on the New York Mercantile Exchange (NYSE)
increased by $0.11 (0.15%) to $73.19 a barrel. 

The initial benchmark trading ended at $75.19 and $73.08 respectively.

U.S. Department of Energy

The U.S. Department of Energy released a report the day before on reducing the country’s oil reserves for the fifth week in a row, the longest decline since January. 

U.S. oil inventories for the week ending June 18 fell by 7.6 million barrels to 459.1 million barrels, the lowest level since March 2020. 

Gasoline inventories decreased by 2.9 million barrels and distillation outputs increased by 1.8 million barrels.

The nuclear agreement with Iran

According to experts, oil prices rose against the backdrop of U.S. stock data.

They confirmed the strong outlook for fuel demand growth in the second half of the current year, supported by the resumption of land and air transportation.

There are also gaps in the negotiations on the 2015 nuclear agreement with Iran.

Iran said on June 23 that the United States had agreed to lift all sanctions on Iranian oil and shipping. 

However, Washington said it would “not agree until everything is agreed” in talks to renew the 2015 nuclear agreement with Iran.

The Organization of Petroleum Exporting Countries (OPEC) and its allies are discussing further increases in oil production
and supply as of August 1st at the July 1st meeting.

However, two sources in OPEC + told Reuters that no decision has yet been taken on the matter.

Crude oil prices

Crude oil prices yesterday struck new highs for this year (and for several years),
but did not maintain a significant rise and just yesterday’s session ended slightly positively. 

However, it should be noted that, for the first time since 2018, West Texas Intermediate crude prices reached the U.S. $74 a barrel,
while Brent crude prices rose to approximately U.S. $76 a barrel.

The demand side of the crude oil market has been favored by the information in the U.S. crude oil inventories reports. 

the American Petroleum Institute (API)

The first report appeared on Tuesday and was published by the American Petroleum Institute (API).

It stated that US crude oil stocks fell by 7.2 million barrels last week.

It was twice higher than expected at the beginning of this week: 3.5 million barrels and the decline was expected.

In turn, this reading was confirmed yesterday by the U.S. Department of Energy,
which announced that U.S. crude oil inventories fell last week by 7.61 million barrels,
even more than previously estimated by the American Petroleum Institute. 

Another positive note in this report is the information on the reduction of gasoline inventories by 2.93 million barrels,
with an expected increase of 700 thousand barrels. 

Distillates inventories rose only by 1.75 million barrels, while they were expected to increase by 1 million barrels less.

Most importantly for investors, the fact that crude oil inventories in the United States are already beginning to decline at a faster pace is crucial. 

This result is in line with expectations that the summer travel season will contribute to increased fuel demand,
which in turn will support higher crude oil prices on the world market, especially those on the U.S. market.

Good start for European exchanges

The European stock markets began Thursday’s session at a rising edge pending the Bank of England meeting – which will announce its periodic decision on interest rates – the IFO business survey in Germany, and final GDP data for the first quarter in the United States.

In Spain, the National Institute of Statistics confirmed that the Spanish economy rebounded in the first quarter of 2021,
compared to the last quarter of 2020 in which it remained stagnant, although it reduced deflation to 0.4%, less than progress in April.

Minutes after 07.00 GMT, the German stock market was the highest at 0.59%; followed by Paris at 0.48%; Madrid at 0.47%, and London at 0.20%.

The Euro Stoxx50 index, which includes the main European companies, rose by 0.52%.

The mixed performance of Chinese indices.. Japan is stable

The Tokyo Stock Exchange closed a dull session on Thursday, suffering profit-taking in the absence of incentives in the near future of the market,
pending a major inflation index in the United States on Friday.

The Nikkei ended in almost perfect balance at 28,875.23 points, while the expanded Topix index lost 0.1% to 1947.10 points.

On Wall Street, which set the pace for the next day’s meeting in Tokyo, the Nasdaq index rose slightly Wednesday to a new record,
but the Standard & Poor’s and Dow Jones’ indicators were rather weak.

Among other things, investors were preparing to see the figures for the U.S. Consumer Price Index in May in the United States,
with the data being used as a benchmark for the U.S. Federal Reserve to assess the pace of inflation in the country.

In China, Hong Kong’s Hang Seng Index rose slightly, while the Shanghai and Shenzhen composite indices fell at the end of the session.