Connect with us

Business

Is the recovery of the oil market ahead of the fundamentals?

 


Endless hope that a new round of US stimulus will magically bring life back to normal and push prices up for longer suggests the market is detached from the reality of high unemployment and a still weak economy.

Frigid temperatures in the shale zone added to the recent recovery, as U.S. oil production fell by nearly 4 million barrels per day. But warm weather is coming to Texas – this week in fact – and prices fell below $ 60 a barrel on Friday after hitting $ 61 midweek.

Fundamentals suggest the market is getting ahead of itself, as it did in the second half of 2019, when prices climbed to $ 75 a barrel before plummeting to around $ 40. To put the economic recovery in perspective, there were 4.5 million people in the United States without jobs in the last week of January, up from 1.6 million during the same period in 2020.

Crude oil prices, however, are about 10% higher than they were at this point last year, when the novel coronavirus causing the deadly COVID-19 was only making headlines. newspapers. Since then, around 2.4 million people have died worldwide from complications from COVID-19.

Yet, to hear from energy policymakers, the situation has sort of returned to normal. Russian Deputy Prime Minister Alexander Novak, a member of the joint committee to monitor market conditions for producers operating under the OPEC + umbrella, said last weekend that the price reflected a balanced market.

It may be true. Russia and Saudi Arabia are the de facto leaders of the 20 or so producers who have agreed to cut crude production to avoid another collapse in oil prices.

In addition to the deal, Saudi Arabia cut production by another million barrels per day, hoping to keep the price of oil at a level favorable to producer economies.

But economists from the Organization of the Petroleum Exporting Countries noted that the negative economic impact of social restrictions aimed at controlling the pandemic is expected to persist at least until the first quarter of the year.

And a strong rebound in oil demand is not likely until the second half of 2021.

Hope over experience

The voluntary restriction of production to some extent matched weaker demand, supporting the recovery of raw materials.

Bob McNally, chairman of the Rapidan Energy Group, a Washington-based consulting firm, however, said the rally appeared to break away from what fundamentals would otherwise support.

“We, like most barrel counters, expect the inventory draws and Saudi Arabia’s unexpected voluntary decline to support prices,” he said. “But the point of view here is that the rise in crude prices has decoupled from the fundamentals of supply and demand and reflects the positioning of investors (for a strong recovery) driven by vaccinations, stimulus measures fiscal policy and a torrent of central bank liquidity.

In the United States, the acquittal of former President Donald Trump for inciting insurgency on January 6 paves the way for the Biden administration to move forward with a $ 1.9 billion stimulus package. dollars.

While the consensus among economists is that the massive spending plan is needed to accelerate a recovery, some, including former Treasury Secretary Larry Summers, have warned that it risks boosting inflation.

While headline inflation remains low, energy prices have risen rapidly. For gasoline, inflation fell from 0.5% in November to 7.4% last month.

This should be detrimental to continued demand growth, which in turn could stifle the rally, analysts said. The national average retail price for a gallon of regular unleaded gasoline was $ 2.50 for Monday, a 2.5 percent increase from the same period last year, according to AAA.

What Are The Main Benefits Of Comparing Car Insurance Quotes Online

LOS ANGELES, CA / ACCESSWIRE / June 24, 2020, / Compare-autoinsurance.Org has launched a new blog post that presents the main benefits of comparing multiple car insurance quotes. For more info and free online quotes, please visit https://compare-autoinsurance.Org/the-advantages-of-comparing-prices-with-car-insurance-quotes-online/ The modern society has numerous technological advantages. One important advantage is the speed at which information is sent and received. With the help of the internet, the shopping habits of many persons have drastically changed. The car insurance industry hasn't remained untouched by these changes. On the internet, drivers can compare insurance prices and find out which sellers have the best offers. View photos The advantages of comparing online car insurance quotes are the following: Online quotes can be obtained from anywhere and at any time. Unlike physical insurance agencies, websites don't have a specific schedule and they are available at any time. Drivers that have busy working schedules, can compare quotes from anywhere and at any time, even at midnight. Multiple choices. Almost all insurance providers, no matter if they are well-known brands or just local insurers, have an online presence. Online quotes will allow policyholders the chance to discover multiple insurance companies and check their prices. Drivers are no longer required to get quotes from just a few known insurance companies. Also, local and regional insurers can provide lower insurance rates for the same services. Accurate insurance estimates. Online quotes can only be accurate if the customers provide accurate and real info about their car models and driving history. Lying about past driving incidents can make the price estimates to be lower, but when dealing with an insurance company lying to them is useless. Usually, insurance companies will do research about a potential customer before granting him coverage. Online quotes can be sorted easily. Although drivers are recommended to not choose a policy just based on its price, drivers can easily sort quotes by insurance price. Using brokerage websites will allow drivers to get quotes from multiple insurers, thus making the comparison faster and easier. For additional info, money-saving tips, and free car insurance quotes, visit https://compare-autoinsurance.Org/ Compare-autoinsurance.Org is an online provider of life, home, health, and auto insurance quotes. This website is unique because it does not simply stick to one kind of insurance provider, but brings the clients the best deals from many different online insurance carriers. In this way, clients have access to offers from multiple carriers all in one place: this website. On this site, customers have access to quotes for insurance plans from various agencies, such as local or nationwide agencies, brand names insurance companies, etc. "Online quotes can easily help drivers obtain better car insurance deals. All they have to do is to complete an online form with accurate and real info, then compare prices", said Russell Rabichev, Marketing Director of Internet Marketing Company. CONTACT: Company Name: Internet Marketing CompanyPerson for contact Name: Gurgu CPhone Number: (818) 359-3898Email: [email protected]: https://compare-autoinsurance.Org/ SOURCE: Compare-autoinsurance.Org View source version on accesswire.Com:https://www.Accesswire.Com/595055/What-Are-The-Main-Benefits-Of-Comparing-Car-Insurance-Quotes-Online View photos



picture credit

ExBUlletin

to request, modification Contact us at Here or [email protected]