US, WASHINGTON (ORDO NEWS) — On Wednesday, May 20, the price of Mexican oil rose and became the highest since March 6, when Russia broke off a deal with the Organization of Petroleum Exporting Countries (OPEC), which ultimately led to a collapse in the oil market.
On Wednesday, May 20, the Mexican state oil and gas company Pemex announced that it was selling the Mexican oil mix at $ 27.71 a barrel. The increase was 4.4% or 1.16 dollars compared with Tuesday, May 19.
The cost of national oil has not reached such a level since March 6, when the agreement on the reduction of oil production between OPEC and Russia, which was concluded three years ago, ended. This happened after Moscow was offered to significantly reduce production in order to compensate for the low demand caused by the outbreak of coronavirus.
Russia rejected the offer. In response, the oil cartel lifted production restrictions, which led to a price war lasting several weeks.
The overabundance of oil that was triggered by this conflict, as well as a sharp decline in demand due to the crisis caused by the coronavirus pandemic, led to the fact that there was no room for oil storage in the tanks. In addition, international quotes collapsed. On April 20, oil prices fell below zero for the first time in history.
A month later, a feeling of relative calm appeared on the oil market. This is due to efforts to reduce supply around the world and the possible increase in demand in China, the United States and other countries that have begun to resume activities suspended due to the health crisis caused by the coronavirus pandemic.
On Wednesday, May 20, the US Energy Information Administration announced that last week, oil reserves in the country fell by 5 million barrels. Thus, this is the second decline in a row in a week.
The price of Mexican Pemex brand oil at $ 27.71 corresponds to 4.06 pesos per liter of refined oil, given that each barrel contains 159 liters, and in accordance with the FIX exchange rate determined by the Central Bank of Mexico.
In this regard, since the beginning of the year, the average price of Mexican oil is $ 31.99. According to estimates by the Ministry of Finance on April 1, the price was supposed to be $ 24, and initially in the budget for 2020 it was assumed that the price would be $ 49.
In turn, the price of American WTI brand oil, which equals the producers of the Mexican oil mixture, amounted to 33.49 dollars. This is the highest price since March 10th. Compared to Tuesday, May 19, it increased by 3% or 99 cents.
In a report published Wednesday, May 20, Oanda market analyst Edward Moya warned that WTI oil would not be very profitable until it began to remove restrictions associated with increased incidence of covid-19.
According to the Bloomberg agency, the price of Brent crude produced in the North Sea increased by 3.2% or $ 1.10 and reached $ 35.75 on May 20.
Contact us: [email protected]