As oil becomes more expensive under the influence of words, speculation and dramatizations
Last week oil prices had a bad fever — starting with the collapse, they rose to multi-month highs. Commodity roller coaster ride and the ruble, breaking the mark for the mark. Experts warn that the oil market is now heavily influenced by speculators, and the reasons for the rise in price of black gold is almost there.
Short jumps
The Russian government is ready to collapse of oil prices. About it on April 21, said Prime Minister Dmitry Medvedev. In a conservative variant of development of the Russian economy laid the price of oil $ 25 per barrel, said the head of government. Now it is better to understate the forecast, than to look for resources to cover the budget deficit, he rightly reasoned.
But while the cost of oil is far from the most pessimistic forecast of the government.
Recall that the Doha deal failed, because Saudi Arabia refused to assume any obligations without the participation of its chief rival — Iran. Moreover, the official representatives of the Kingdom declared in advance. Tehran generally skimped negotiations. The Islamic Republic after the lifting of sanctions need to increase production, to recapture lost markets to squeeze competitors (those same Saudis or Russians). And about the same time, Iran also said repeatedly.
It seems that the main lobbyists frosts — Russian energy Minister Alexander Novak and representatives of the countries of Latin America — hoping for a miracle. The miracle did not happen.
The news of failed negotiations lowered oil prices by nearly 5 per cent to 40.5 per dollar. And the U.S. currency rose to 68 rubles.
Saudi Arabia did not sign a Treaty to freeze the production that caused the collapse of oil prices. The photo (centre): the Minister of oil of the Kingdom Ali al-Nuaimi
Photo: Nikku / xinhua / Globallookpress.com
However, the negativity was quickly won back by the market, the bids returned to their previous levels. Then the oil started to grow. Dropping up to 40 dollars per barrel a day of talks, on April 17, Brent by Thursday, 21 April, rose to $ 46.
Coincidence
One of the reasons for buying oil (which leads to higher prices) by the speculators was the statement of the head of the International energy Agency, Fatih Birol about what is expected this year, the largest decline in production in hydrocarbon-exporting countries outside OPEC. According to him, the USA, Canada, Latin America and Russia will experience a dramatic decline in production, as low rates forced investors to reduce investment in the sector by 40 percent.
As a result Brent jumped 21 per cent to $ 46, and Texas WTI — 44,35 17 cents to the dollar.
Sberbank CIB analysts Tom Levinson and Iskander Lutsk believe that with a further increase in oil prices, the dollar may weaken to 63.7 ruble is the level of August 2015.
On Monday, April 25, in Russia there comes the deadline for payment of taxes amounting to almost 600 billion rubles. This will cause growth of demand for roubles and, accordingly, increase the rate of the national currency. “That’s why exporters are more actively sell the currency, fearing a further weakening of the dollar”, — experts say.
Director of analytical Department of investment company “Golden Hills-Kapital AM” Mikhail Krylov said “Tape.ru” that the rising prices caused by a complex of factors, by coincidence, worked at the same time. On the one hand, markets expect growth of Chinese demand. The PRC government has pumped money into the economy equivalent to 0.8 percent of GDP of the country that needs to revive it.
Also affected by the strike of oil workers of Kuwait. Their frustrations stem from the plans of the authorities to cut wages and benefits. Companies are forced to cut production. For several days the global market has lost 1.7 million barrels of production per day. About the same amount of oil experts believe the extra — it is a large overhang of supply over demand puts pressure on prices, and does not allow them to grow.
“All these factors are superimposed on each other, and that caused the price increase. However, the fundamental reasons for the rise in price of oil I don’t see. The prices will not exceed $ 50 per barrel. Moreover, when news of the revival of the oil industry in the U.S. and growth stocks (and this usually happens once every 2-3 weeks), we will again see falling prices,” — said the expert.
Half full, half empty
The partner of company RusEnergy Mikhail Krutikhin believes the growth of prices in the oil market is purely speculative. “Oil demand lags behind the proposals. Two hundred tankers were in the ports of China, and stand — they could not unload. Fundamentally nothing has changed,” he says.
The oil market is under the strong influence of speculative moods
Photo: Essam Al-Sudani / Reuters
The expert is very skeptical of the forecast Birol, noting that his predictions very rarely come true and are reviewed approximately every three weeks. Strike Kuwaiti oil and he is called “like a performance”, drawing attention to the fact that the protest lasted only a day and a half and the strikers achieved nothing. The oil Minister of the country ruled out the possibility of negotiations with them, and they obediently returned to their workplaces. “Apparently, someone wanted to capitalize on price fluctuations,” suggested Krutikhin.
If we proceed from the relation of supply and demand, then there is no reason to rely on expensive oil, he said. “Temporary price fluctuations under the influence of stupid statements and false strikes do not change anything”, — he stressed.
This is partly confirmed by the behavior of prices on Thursday, April 21. In the middle of the day pictures vigorously moved to 46 USD per barrel Brent, have crossed that line and then fell sharply to 44,74 dollar. Against this background, the fever and the ruble. The dollar traded below 65 rubles, above 66. Strong volatility on the currency and commodity markets.
Independent analyst Mikhail Zak believes that the recent negativity around oil prices have been so many that the market has ceased to react. “The market always looks for the balance. Much depends on point of view on the situation. Yes, the ratio of supply and demand hasn’t changed, relatively speaking, we had the glass half-filled with water. But if before him were inclined to look as the glass half-empty, now looked at as half full”, — says the expert.
According to him, prices started to grow after a long decline. “It’s like jumping on a trampoline,” said he. When Zack called to treat statistical data on the supply of oil in the world with some skepticism. “Accurate statistics are only available in the US, in Europe there is no joint statistics, as for China, there is generally all the data are closed, and what is published may differ from reality quite significantly,” said the analyst.
Tuesday, April 19, at the forum “oil and gas in 2016,” the head of the American company Exxon Mobil Glenn Waller was asked to predict oil prices. This top Manager said that Exxon Mobil have long been engaged in predictions of prices. According to him, was trying to predict the price of black gold for half a century and have become convinced that this is a futile exercise.
But such predictions are highly relevant. So be it, until the economy is freed from dependence on natural resources. Apparently, the Russian government will have to heed the advice of Nobel prize winner for Economics Christopher Pissarides, who believe that our country need to forget about oil and to create conditions for the emergence of competitive domestic firms.
