Ikrami Abdullah from Riyadh
Today, Tuesday, Brent crude prices rose by 1.6 percent to trade at $ 45.86 a barrel and touched $ 46, while the prices of West Texas Intermediate crude (WTI) "American" rose by 1.7 percent to trade at $ 43.35 a barrel upon settlement, after recording "Brent" During the session, it was $ 46.5, and the “American” $ 43.5.
According to the monitoring unit of the reports in Al-Eqtisadiah newspaper, oil prices after yesterday's rise recorded a huge jump within four months, as Brent crude rose 187 percent from the lowest price recorded on April 22 at about $ 16, while US crude jumped 330 percent lower than the near-ten dollar price during the same period.
The rise in crude oil was driven by several factors, first, the halting of a large part of the production on the coast of the United States on the Gulf of Mexico due to tropical cyclones Marco and Laura, secondly, an American-Chinese affirmation of commitment to the first phase of the trade agreement between them, and third, the growing optimism in reaching a treatment And a vaccine to counter the Coronavirus, which in turn supports a faster recovery of the global economy affected by the pandemic.
The rise also comes despite the increase in oil supplies at the beginning of this August with the reduction of the actual production cuts of the "OPEC +" group, to 7.7 million barrels per day and rise to 8.1 million barrels per day after adding compensation from countries, which were less compliant in the past months.
On June 6, the OPEC + agreement to reduce production by 9.7 million barrels per day was extended until the end of last July, which will be gradually reduced until April 2022.
The rise in oil during the last period has prompted an improvement in demand with the beginning of the gradual opening of economies around the world and the easing of restrictions to confront Corona, in addition to the decrease in supply with the extension of the cuts of the "OPEC +" coalition, in addition to optimism about reaching a vaccine that confronts the outbreak of the Coronavirus.
In early May, the implementation of the historic agreement between the countries of the "OPEC +" alliance began to reduce production by 9.7 million barrels per day for two months, then reduce production cuts to eight million barrels per day, starting from July until the end of 2020.
Later, production will be reduced by two million barrels per day to six million barrels per day, from early 2021 until April 2022.
The recent oil rises came after sharp declines in the previous sessions as a result of the accumulation of global stocks and a significant decrease in demand due to the repercussions of the Coronavirus, which led to the world’s countries closing their borders.
And April 20 saw the price of a barrel listed in the New York market deteriorate to below zero for the first time in history with the end of trading, which means that investors are ready to pay to get rid of crude.
West Texas Intermediate (WTI) crude for May delivery fell, at the time, by $ 55.90, or 306 percent, to-$ 37.63 a barrel upon settlement.
The decline came, as this was the penultimate day for the May delivery contracts, and buyers do not want to take delivery this month because US warehouses and wells are unable to absorb production.
The decline at the time coincided with the expectation of the International Energy Agency, a contraction of oil demand by 23.1 million barrels per day in the second quarter of this year on an annual basis, and 9.3 million barrels per day during 2020.
It also expected a record supply contraction of 12 million barrels per day in the oil market in May, after the production cut agreement.
The International Monetary Fund had expected the global economy to shrink 3 percent this year.
Oil lost about two-thirds of its value during the first quarter of 2020 in the worst quarterly performance in history, to trade during the first quarter at its lowest levels since 2002 and 2003, in conjunction with the outbreak of the SARS epidemic.
The declines in the first quarter came with increasing fears of a global recession due to the Coronavirus, and thus oil demand was hit significantly.
Prices were affected during the first quarter by the increase in global oil supplies, after the failure of the "OPEC +" agreement to further reduce production by 1.5 million barrels per day due to the Russian refusal, which prompted Saudi Arabia to announce an increase in its supplies to 12.3 million barrels per day and its exports to more than ten million barrels per day. The UAE also increased its production at that time.
Economic Reports Unit