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Vasily Koltashov: the battle for oil

Василий Колташов: битва за нефть

Oil surprised everyone in February. She has not grown significantly, but also did not fall. The price then rose, then fell, making it sometimes very unexpectedly. However, some comfort of oscillations was reached. For how long?

On 20 January, a barrel of Brent crude oil fell to 28.2 us dollars. From that moment began the winter of “miracle” on the market of hydrocarbons. On January 29, a barrel of oil was brought down to around 36 dollars.

This rapid growth pending the decision of OPEC, Russia and other independent producers on the development of some common, and perhaps – a decision on reducing oil production.

“Black gold” has risen in price then in the Wake of a weakening dollar, other world currencies. This event has led many experts to doubt the good prospects of the American economy, as well as the willingness of the Federal reserve to continue to raise its key interest rate to make the loan more expensive for banks, hence their less than favorable speculation.

Russians rushed to sell dollars again wopila passion for the national currency. However, on February 9, oil was again at the bottom. Barrel fell to 30,88 dollar. By this time there were several jerks of prices down, but this was the most significant.

But the true miracle of “oscillation” happened on February 17 when a barrel of oil has risen again. Its price amounted to $ 34,28. And this miracle was not a new peak, but at the background of which it was recorded.

On the one hand, by this time out of China statistics on foreign trade. Export yoy in January fell by 18.8% and imports by 11.2%. Following left bad data for Japan, Australia and other countries in the Asia-Pacific region. The market didn’t notice them. Played entirely different facts. Played the initiatives of manufacturers.

In mid-February, the country’s oil producers have managed to find a common language. Moreover, they were able to influence the market, which failed to achieve in the second half of 2015. Then all the threats of the agreement between suppliers, the market ignored.

“This can’t be. It won’t work”. At such sentiment, oil prices fell for many months. Until, finally, they reached in January a local bottom, as speculators and buyers suddenly believe in the ability of manufacturers to respond.

And producing countries gave this response. Consultations began, the number of statements and warnings. In this pictures every time bounced up after another – already small – reduce. Despite the fact that the peaks of each bounce up in February were below the last, the market clearly perceived the position of suppliers seriously.

And they have reached an agreement to freeze production at the level of 11 January. It was able to arrange Russia and Saudi Arabia and other OPEC countries. The Iraq initiative was approved but to her and joined in.

The actual result was to stop the fall in oil prices and even increase them. Another interesting fact is that speculators (the banks especially in the USA) started to play on the rise. They were not punished countries with large exports of hydrocarbons that was simply impossible, and just saw the possibilities of the game to improve.

The opening exchanges in the U.S. the price of a barrel began to grow rapidly. She slid higher until he reached the level of temporary equilibrium. And play down those same speculators were in the middle of February.

As a result, the oil rose in price, rebounding from January’s bottom. She didn’t, and probably will not go up much. The obstacle to that is the crisis in many “emerging economies”, including China.

This creates new pressure on the commodity markets. His strength is enough at some point, commodity prices went down. This will be difficult to resist with the help of verbal interventions or freezing of the production level. The excess oil will be created not by production, but occur as a result of the compression of consumption.

When it can happen, hard to say. It is also difficult to guess when the second wave of the crisis will lead to a new, more sustainable weakening of the American currency. At least it also will not raise the price of oil in dollars, so as its consumption in the United States and other countries of center of global capitalism would fall.

But this is a challenge for producers of hydrocarbons in the future, even if not too distant. Now they have to respond to the threat of lower prices under the influence of Asian and statistics of large oil reserves in the United States. How to do it? Ordinary statements are not enough. Consultations are already underway. The solution of the problem and will focus on the OPEC meeting, which is scheduled for March 1.

Oil reserves in USA significant. On February 18 they reached 504,1 million barrels. This is a record since 1982. Data from the Ministry of energy of the USA (DОE) also indicated: for the year reserves growth amounted to 18.4%. This will put pressure on prices, countered by what, in the long term, Russia can only processing their raw materials and the re-industrialization, but less developed exporting countries can do nothing.

In the short to medium term they have to fight together with new factors which almost convinced speculators in the big benefits of the game down. And the other principles they adopt.

In a complex cocktail of factors should be added the likely devaluation of the yuan. She suggests, based on the failure in the external trade of the PRC. This American speculators would like to play.

According to experts of the Department of political economy of REU them. G. V. Plekhanov, the yuan is likely to fall by 30-40%. In this scenario, exports from China will be supported, but imports will fall, because the fall in domestic demand. Oil China will need less.

#{author}it has been announced of the OPEC meeting, and come out of the Ministerial statement that can be made and greater restrictions on extraction. While the probability that neither strongly up nor down significantly, oil prices will not go away.

February 22, Tsna again podrasli. This time their pushes up the havoc us shale producers. However, on the day of the auction barrel never made it to 35 dollars. Not adhere it and at the peaks.

But in General we can conclude that the efforts made in February to raise the minimum point.

Oil to 30 dollars per barrel was only 9-11 in the number, after which the lows have risen. Looks like a threat for countries exporting zones, where it would probably fall to 25 dollars per barrel, the prices have gone. And this is a significant victory.

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