Russian Officials Feel Optimistic About Oil
Crude Oil retraced up to $20 today and Russian energy minister is feeling slightly optimistic now
Last year the demand for Crude Oil declined as the trade war between US and China hurt the global economy and the demand for energy products. We saw the demand for Oil return somewhat in the Q4 of 2019 after the sentiment improved in financial markets, but this year we saw two major crashes.
One crash took place in early March, after the failure of OPEC+ to reach a deal, while the second crash came in April, with US WTI crude falling to -$37, as US producers had no place to store Oil. But, we have seen a recovery in the last two weeks and US WTI Crude Oil is heading for $20 now. This looks promising and the Russian energy minister is also feeling sort of optimistic.
Although, he notes that a return to pre-coronavirus levels will take quite some time. Although, if the world starts to reopen, as it is, then heading towards $40 and $50 won’t be that big a deal I reckon; but we will have to see how many and which businesses have been sacrificed in this house arrest madness, which has put the global economy in the worst recession ever probably. Below are Sorokin’s comments:
Comments by Russian Deputy Energy Minister, Pavel Sorokin
- We can see first signs of recovery in the oil market
- No reasons for oil to fall to or below zero now
- Return to pre-virus oil demand will take a long time
- Nobody is interested in breaking OPEC+ deal now
- Full compliance may be difficult for some countries
- Violation of OPEC+ deal would bring new collapse in oil
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