US, WASHINGTON (ORDO NEWS) — Oil prices are rising rapidly for the second day in a row, as the countries of Europe, Asia and America are gradually lifting quarantine restrictions and the business begins to operate in the new pandemic.
After rising 5-6% on Monday, oil prices again jumped 7-9% on Tuesday as transport flows and fuel demand recovered.
The closest West Texas Intermediate (WTI) oil supply contracts, the American benchmark, by 9:00 Moscow time, rose 9%, or $ 1.6, to $ 22.13 per barrel. The barrel of the European benchmark Brent rose by 8.5%, or $ 2.1, to $ 28.69.
Italy, Spain, Nigeria and India, together with Ohio and other US states, began to allow the resumption of work and opened construction sites, parks and libraries with conditions for maintaining social distance, disinfection and wearing masks.
As noted in a study by RBC Capital Markets, traffic in most of the US has recovered.
Swiss bank UBS said that easing quarantine restrictions will help to balance the supply and demand on the oil market in Q3 and increase the price of oil.
According to UBS, the price of Brent oil will increase by the end of 2020 to $ 43, and by mid-2021 – to $ 55 per barrel. “The prospects for this and next years are becoming increasingly bright: demand should be supported by the recovery of the global economy,” saidReuters UBS Commodity Analyst Giovanni Staunovo.
In anticipation of the recovery of the oil industry and the worst period in its history, hedge funds and investment fund managers became the largest buyers of oil products contracts for the fifth consecutive week ending April 28.
Nevertheless, global oil demand and prices suffered historic losses in April, and recovery is likely to be slow, as full air service is not expected to resume in the near future.
Qantas Airways Australian national airline CEO Alan Joyce said on Tuesday that “international transportation demand could take years to get back to what it was.”
“In the foreseeable future, travel demand is almost zero,” said Frank Benenati, a spokesman for Chicago-based United Airlines Holdings Inc. The Chicago carrier plans to cut at least 3,400 managerial and administrative posts in October.
The countries of the OPEC oil-producing organization, together with Saudi Arabia, Russia and other major producing countries, began reducing oil production on May 1. Therefore, the market ignored the decision of the Texas energy regulator to refuse to cut production by 20% in the largest US oil producing state.
OPEC and its allies, led by Russia, together with the acceding countries, have promised to reduce the oil market by 9.7 million barrels per day starting May 1 as part of the OPEC + deal. If, together with them, the remaining countries continue to reduce production, as promised, then the reduction in production can reach 15-20 million barrels per day.
According to estimates by the International Energy Agency (IEA), oil demand in April will be 29 million barrels per day lower than a year ago, and in May – 26 million.
The IEA expects the situation to stabilize in the second half of 2020: “Oil shortages will appear on the market, which will complete the period of stockpiling and allow for a return to more normal market conditions.”
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