What Happens to Oil Prices
Because oil prices are on the swing.
Crude oil futures rose nearly 3% on March 11 in a surge of bullish sentiment fueled by the best prospects for the second half of 2021, according to S&P Global Platts .
RISING PRICES
Indeed, the past two weeks have been profitable for oil traders. Oil prices have reached new highs in a trend that began a few months ago with the circulation of the first estimates on the effectiveness of vaccines. According to Oilprice , in addition to vaccines, also the policy conducted by Opec- + which "continued to maintain a ceiling on its production, with Saudi Arabia making a unilateral cut of 1 million barrels per day in addition to its quota ”Had a major effect on prices thanks to the global reduction in crude oil inventories.
THE FLAME OF OIL DUE ALSO TO THE HOUTHI ATTACKS ON SAUDI INFRASTRUCTURE
In short, this series of events, coupled with a recent series of attacks by Yemeni Houthi rebels against Saudi oil infrastructure, has ensured Brent surpassing the $ 70 threshold for the first time in 14 months, according to the Financial Times, although only briefly, thanks to traders who reacted as always to the news of an attack on Saudi oil infrastructure by starting to buy oil and pushing the price higher.
LAST TWO WEEKS OF SALES
However, according to Reuters' John Kemp, institutional traders have started selling oil in the past two weeks. Some for profit, others to bet on a future price drop. Kemp reported that the funds sold a total of 20 million barrels across the six most traded futures and options on oil production. Quite little when compared to a weekly purchase rate of 36.53 million barrels in the previous 15 weeks.
The latest reports on oil price movements suggest, in fact, that this flare-up will not be lasting. Prices are already falling after hitting highs in recent months, under pressure from a stronger US dollar (after the go-ahead for the $ 1.9 trillion Biden plan) and the Houthis' attack on Aramco's infrastructure. which, however, did not affect production, according to World Oil . In fact, in these hours, Brent is trading below 70 dollars
THE USA STIMULUS PACKAGE CRUCIAL
The US stimulus package is considered by analysts to be one of the crucial factors for the recovery of oil demand in the world's largest consumer of crude oil. "The package, coupled with OPEC + cuts, could hypothetically push prices even higher – closer to the $ 80 a barrel Saudi Arabia needs to balance its budget – but for now this is just one. hypothetical possibility ".
"The spike in crude oil was an instinctive reaction to a shocking decision by OPEC +," Vandana Hari, founder of Vanda Insights, told Bloomberg earlier this week. Yet "the Kingdom could challenge its luck if it pursues the hawkish path for too long".
THE EFFECTS OF SHALE USA TO BE CHECKED
The effects of headwinds outside OPEC + and shale drilling also remain to be verified. In the United States, for example, a number of medical experts have warned states not to rush to ease their movement restrictions due to the spate of new variants of coronavirus infections. In Europe, the new variants are marching shipped across countries, raising new infection rates once again. This increases uncertainty in the outlook for oil demand and the uncertainty in turn leads to greater price volatility, ”Oilprice pointed out.
BIDEN POLICIES SHOULD NOT CAUSE US OIL PRODUCTION SLOW
The new policies pursued by the new president Joe Biden also fit into this context. The White House tenant has put a cap on the US oil and gas industry with his plans to reform federal land leases and permits. "The immediate impacts are likely to be negligible, but in the medium to long term the new regulations could have far-reaching consequences, not only on US shale production and conventional offshore production, but also on the revenues and oil balances of states where a 'drilling activity currently takes place on federal land, ”Oilprice highlighted.
All forecasts show that there will be impacts on production and tax revenues for states. But how drastic these impacts will be will depend on the final rules and the industry's success in questioning potential drastic measures in court. According to Wood Mackenzie , the current temporary moratorium will have little impact on oil production. "The review process, however, could lead to more far-reaching measures, such as heavier royalties or environmental obligations on new leases, a ban on the sale of new leases, and / or a ban on new permits on leases. existing lease. It could also result in something similar to normal, ”said Pablo Prudencio Senior Research Analyst, US Lower 48 Supply, at WoodMac.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/che-cosa-succede-ai-prezzi-del-petrolio/ on Sun, 14 Mar 2021 16:57:17 +0000.