Oil Continues to Lose Value

June futures for WTI American oil are rapidly losing value, on Tuesday the price at the auction reached $ 6.55 per barrel, the price of Brent fell to $ 17.52 per barrel – to a minimum since 2002. The head of the Ministry of Energy, Alexander Novak, assures that the situation is under the control of OPEC +, and calls not to dramatize the situation.

The oil market continued to fall on Tuesday, April 21, global markets remain negative. Brent brand with delivery in June per day lost in price more than 27%, WTI – more than 54%.

“It is important to understand that this is a paper market, i.e. trading in derivative financial instruments rather than physical oil. Quotes of the June futures on Brent and WTI are significantly higher, although they are also subject to volatility due to the general negative mood in the market, ”

said the Minister, also noting that the OPEC + countries are closely monitoring the situation and, if necessary, have all the opportunities for response.

On Tuesday, April 21, the Moscow stock exchange closed with a decrease in the main indices, follows from the trading data. The Mosbirzhi index fell by 1.5% to 2488.02 points, the RTS index – by 5.26% to 1012.15 points.

The dollar at the time of the close of the Moscow Exchange at 18.50 was worth 77.43 rubles, the euro – 84.08 rubles. The Central Bank raised the official rate to 76.26 rubles per dollar and 82.62 rubles. for the euro on April 22.

At the same time, ruble volatility may increase temporarily: BCS Premier expects that on Wednesday the ruble exchange rate will be formed in the range of 76-77.5 rubles per dollar.

As of 20.46 Moscow time, the price of Brent fell 27.22% to $ 18.61 per barrel, WTI at 20.46 Moscow time cost $ 9.37 per barrel, a decrease of 54.14%. Minimum prices on Tuesday fell to $ 17.52 per barrel and $ 6.55 per barrel, respectively.

By half-past nine in Moscow time on Monday, April 20, the price of May WTI futures collapsed by more than 300%, reaching minus $ 40 per barrel. The collapse of the WTI price to a negative level was noted for the first time in history – this has not happened since the opening of trading on NYMEX in 1983.

Yesterday’s decline in WTI quotes of the May contract, according to BCS Premier, was caused by the actions of large speculators and had a very indirect relation to changes in fundamental market factors.

Earlier this month, OPEC + countries agreed to reduce oil production by a total of 9.7 million barrels per day, but the new agreement will enter into force only in May, so oil producers still maintain a fairly high level of production, and market players at the conclusion The nearest oil contracts do not take this factor into account.

Countries that are not members of the alliance have declared their readiness to make additional cuts in production. Thus, the overall decline in production outside OPEC may reach 5.2 million barrels per day in the second quarter and, by the end of the year, decrease by 2.3 million barrels per day. However, countries outside OPEC + have not made “hard” commitments to reduce their production within the framework of the new deal and may well be left out of their intentions.

At the same time, experts believe that the new OPEC + agreement will not be enough to compensate for the drop in demand: according to estimates by the International Energy Agency (IEA), in April, demand will fall by 29 million barrels per day – up to the 1995 level.

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Oil Continues to Lose Value - /10

Summary

June futures for WTI American oil are rapidly losing value, on Tuesday the price at the auction reached $ 6.55 per barrel, the price of Brent fell to $ 17.52 per barrel - to a minimum since 2002.

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