Oil will support Saudi Arabia
Start the new trading week was positive for the global oil market. Personnel changes in the leadership of Saudi Arabia and statements about continuing production cuts stabilized the market. The new Minister of energy of Saudi Arabia Abdulaziz bin Salman will adhere to the traditional policy – further reduction of oil production within OPEC. But a trade war between the US and China still threatens global markets is a major uncertainty that causes large investors to reconsider their investments in favour of defensive assets.
There is no clarity, because no one is certain of future levels of energy demand. Despite the fact that the U.S. continues to increase oil production in South America production in North America reduced. Drillers cutting staff and budgets as oil prices remain low.
While the production of shale in the US is on the rise, and in the Permian basin set a new production record, the growth rate slowed down – many companies have recently reduced the rates of production growth, while investors and bankers continue to be skeptical of the revenues of the oil shale industry.
As for the Eastern hemisphere, the OPEC countries have painted themselves into a corner, believing that a temporary measure to reduce oil production will always show the efficiency. When OPEC first announced the restriction of production, to fix prices plummet, it worked. The prices were minimized, which last seen over a decade ago as a result of the us shale boom and OPEC’s attempts to stop him, including maximum flow.
When OPEC said it would cut this thread, the prices rebounded, providing much-needed assistance to countries dependent on oil in the Persian Gulf. It also helped oil producers worldwide, including shale areas of the United States. In the current environment, the picture has changed, and this measure is to reduce the production became a necessity. Now need that oil prices went to around $80 per barrel, the break-even point for the formation of a budget surplus of Saudi Arabia.
Yet the global commodities market reacts to the news, so oil prices may continue weak growth. Brent may rise to $62,50 per barrel, WTI – up to $57,80 per barrel.
“International financial center”