Oil price: OPEC against the United States, who is stronger?

  • And
  • +A

By the end of Monday the oil market showed a negative trend: Brent prices have fallen to 77,17$ per barrel.
News about the drop in prices was several – risks worsening trade war between the US and China, where on 6 July should clear up the prospect of the introduction of new fees, and calls Donald trump with the demand from Saudi Arabia and other OPEC countries to increase production of raw materials.
And if the consequences of confrontation between China and America is difficult to assess, it is possible to wonder how beneficial to the OPEC countries, Russia and other parties to the agreement to go towards Washington?
Let me remind you that since that moment Russia began to work with the oil cartel case in the oil market has adjusted. Oil Minister Alexander Novak has repeatedly stated that our country considers its work with the Alliance as a long-term cooperation and plans to support the balance of supply and demand in this market. OPEC+ showed a high degree of influence on the world oil market, even in spite of the rapid growth of shale oil in the United States.
In addition, recently at the meeting of OPEC countries agreed to increase oil production by 1 million barrels a day, of which the share of Russia will have 200 thousand barrels per day. The cartel understands that not all countries will be able to proportionally increase production, because there are weak links, such as Venezuela and Libya. Many experts say that Venezuela will continue to cut production due to the difficult economic situation in the country. And Libya in June cut production by 400 thousand barrels per day after two attacks on the largest terminals.
And the sanctions imposed on Iran will also soon enter into force. But despite this, OPEC+ still left himself a loophole, in which they refer to the possibility of revising the quotas again in September at a meeting in Algeria. This paragraph leaves room for maneuver in the future.
Besides, already there is talk that Russia and Saudi Arabia want to offer to all participants of the OPEC agreement to create a permanent organization – the “super-OPEC”, which of course the leading role is exactly these countries. For Russia, this is a definite plus, where the role of long-term partner and ally may be Saudi Arabia. In this Union may not pay attention to America, because the share of these countries account for a fifth of all oil produced in the world. This will automatically provide control on the oil market and protection of their interests.
I believe that instead of making concessions, America, OPEC is interested in the return of their dominant share in the oil market, and therefore will choose a different path.
As for the technical picture, the trend for oil is growing. Last week, the quotes of Brent crude oil rose to the level 79,70$ per barrel, almost reaching the highs of may. Yesterday we saw a pullback to the area of 77+$ a barrel, to the nearest level of support. If it survives, the high probability of the return of quotations in the area of the highs, especially that between the Friday closing and Monday opening of the formed “gap” at the level 78,95-79,44$ per barrel. It was his quotes and try to close if the external background will favor it.
If the level of 77$ per barrel will not stand, it will expect lower prices in the range of 76-76,$ 4 per barrel to the fast moving average ЕМА21 the other day.
_________________
Anastasia Ignatenko,
Senior analyst,
GK Teletrade