Oil markets recovered on Monday morning after Friday’s final fall. Us President Barack Obama But it’s not the first time From the hospital he’s brought some kind of relief to the markets. -19 last Thursday, reinforcing bearish sentiment in crude oil markets. As a result, the Brent closed at $39. 27, down 7. 40% w/w while the WTI closed at $37. 05, down 7. 95% p/p last Friday.
Portfolio managers reduced their net long positions through 19. 68 million w/w barrels to 304. 81 million barrels in WTI contracts, while Brent contracts showed a similar trend, with fund managers cutting their net long positions across 6. 97 million barrels to 97. 22 million barrels. dragged down through a series of points that contributed to the bearish sentiment. On the source side, OPEC production is increasing, Lithroughan’s source is returning and Russia has no assembly production quotas.
Trump’s case to dominate markets
The US President’s fitness scenario looks solid at the moment, but any deterioration can also have a dramatic effect on the US elections and a negative effect on the oil markets. The president can transfer his authority to Vice President Mike Pence. If your ability to lead the country is seriously affected. However, the US election is unlikely to be delayed, even if Trump’s case worsens. In our opinion, the markets are not yet predicting the option of a Biden win on November 3. wins, the U. S. transition of power will accelerate, with nearly $ 2 trillion to end power blank as oil production activity dwindles. Investors would possibly rally about the geopolitical implications of a Biden win in the Middle East, which would possibly come with the renegotiation of a nuclear deal with Iran and a possible easing of sanctions, which will be added to crude oil exports. It would also generate uncertainty about the OPEC agreement, in which President Trump had a heavy hand Related: Oil markets prepare for a difficult end of the year
Weak fundamentals
The basics of the oil market remain weak, especially with the expansion of the source in Libya and the expansion of COVID-19 instances around the world. In India, the number of COVID-19 cases has exceeded 6. 5 million, and the number of reported deaths exceeded 100,000. The UK has reported more than 20,000 new instances per day, while new daily instances in France have exceeded 15,000. It is believed that the uptick in COVID-19 instances in Europe is the result of the reopening of economies during the summer, adding the opening of schools and airports. This uptick in infections raises considerations of additional blockade measures on the European continent in the coming months, which may lead to a slower recovery in global oil demand.
Last week, the EIA continued to publish bullish figures on the recovery in US demand, which had little effect on markets. oil inventories decreased through 2 million barrels to 492. 4 million barrels, while gas inventories rose to 0. 7 million barrels and average distillates decreased to 3. 2 million barrels.
The sharp drop in average distillates is encouraging for the markets as it reflects an increase in business activity. Refining production in the United States increased through 0. 3 million barrels / jw / w to 13. 67 million barrels consistent with the day to September 25. through the decrease in the volatility of the value between July and October. The knowledge of the EIA also emphasizes that the obvious demand for oil in the United States decreased for the moment in a row, to 15. 28 million barrels / d, 0. 24 million barrels / jw / w less. It is seasonal as we slowly move away from the end of the driving season for the winter season.
The effect of norway’s strike so far has been limited
Meanwhile, markets have won some aid in the form of a labor strike in Norway, which has affected the country’s oil and fuel production. It is estimated that six offshore boxes have been closed, resulting in a source outage of 79,000 b/d, which is relatively small compared to Norway’s total production, estimated at 1. 75 million b/d. However, the effect of this strike can be amplified if more personnel are enrolled or if the strike lasts a few more weeks. The new Norwegian Johan Sverdrup box with a capacity of 470,000 b/j has not been affected to date.
By Yousef Alshammari for Oilprice. com
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Dr. Yousef Alshammari is the CEO and Director of Petroleum Research at CMarkits, London, United Kingdom. He is a former researcher of the Organization of . . . More
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