Oil prices keep on recovering from the long-term downtrend seen for over 18 months. This is happening amid the reports coming from the USA, which say that the amount of functioning oil rigs in the USA keeps on shrinking. At the same time, the bears seem to be reducing their exposure to the oil market in advance of the forthcoming oil summit in Qatar. They say the participant may well agree to freeze their oil production quotas during the summit. If that’s the case, this is definitely going to contribute to a further oil price recovery.
Meanwhile, Masterforex-V Academy reports that today’s ICE Brent futures have seen their prices move above $43/b for the first time since December 7th, 2015. The price set a new local high at $43,06/b. This is $2,67/b above the previous trading day’s close price. Nothing fancy, that the oil recovery also triggered a recovery of the Russian Ruble. The thing is, the Russian economy is heavily dependent on the export of crude oil, and more expensive oil means more substantial profits to Russia, which is good news for its national currency, too.
As for the forthcoming oil summit, it is going to take place in Qatar in a couple of days – on April 17th, to be more specific. To date, 12 oil exporters confirmed their participation in the summit. The list of participants includes Russia, Saudi Arabia, Kuwait, United Arab Emirates, Nigeria, Venezuela , Algeria, Indonesia, Oman, Ecuador, Bahrain, and Qatar.
Meanwhile, Bank of America experts predict that the oil market is going to get the balance restored if oil prices reach $60/b. Still, they say that at this level, U.S. shale oil producers are going to start threatening the global market of crude oil with overproduction once again. Last week, the EIA under the U.S. Department of Energy released another weekly report on U.S. oil inventories for the week that ended on April 1st. The report says that the inventories have dropped by as much as 5 million barrels for the first time this year. This is a 1% drop down to 529,9 million barrels. Given the mentioned data, the experts suppose that this may well be the start of another bull market and balance recovery, which may take up to 18 months.
The experts base their standpoint on the very tendencies mentioned in OPEC’s monthly report for March. On the one hand, after a short-term of volatile markets, the global demand for crude oil is going to recover at a steady pace this year. To be more specific, each and every quarter is going to see equal demand growth around 1,25 million barrels a day or 1,5%. At the same time, they expect the global production of crude oil to start shrinking. For instance, OPEC’s production is expected to be cut by 700K barrels a day. Altogether, these factors are going to end up restoring the balance and pushing oil prices higher. They say that the current shrinking of U.S. oil inventories is the first wakeup call. Still, the balance is going to be restored by the fall of 2017.
