Oil firmly stuck at lows
Oil firmly stuck at lows

Analysts and energy investors are upset that oil prices have got stuck at multi-year lows. The oil price war eventually ended with an interim agreement between the two powerful oil exporters, Saudi Arabia and Russia. However, the long-awaited truce has failed to ensure a long-term uptrend of oil quotes. Following the OPEC+ pact on oil production cuts, oil prices rebounded a bit from multi-year lows. Nevertheless, they were not able to recover at least to the levels of the early 2020. Judging by weak demand for energy amid the virus-driven crisis, oil prices will hardly reach previous highs even in the medium term. Most market participants share the viewpoint that the new OPEC+ deal was doomed to failure. This pessimism came true. The deal could not propel the rally of oil prices and offset a record slump in oil demand. Besides, Russia chose the wrong time to unleash the price war. Moscow’s move was a double whammy. Indeed, COVID-10 wrecked demand for crude which had already been low amid a slowdown in the global economy. The Kremlin’s strategy was to remove producers of more expensive shale oil from the global market. In fact, instead of a minor decrease in oil prices, the market went into a tailspin. At present, experts foresee the second wave of the coronavirus pandemic. Any pandemic goes through several stages. The first one has been already passed through in most countries. The second one is just around the corner. The European Commission also warns 27 EU countries of the second pandemic wave, so that they could take precautionary measures. To sum up, the odds are that demand for energy will remain extremely low, thus pushing oil prices down.                         

Published: 2020-05-21 16:12:03 UTC
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