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The price of crude oil showed positive dynamics Friday morning, however, this is not enough to allow the oil to close the current week in the green zone. Throughout the current trading week, black gold fell significantly with slight rises. The main indicator for the fall in the price of oil is due to the concerns about a reduction in oil demand on a global scale, which, in turn, may be caused by the introduction of repeated restrictive quarantine measures in a number of countries that are greatly affected by the coronavirus pandemic. Countries such as the United Kingdom and France are already on the verge of a second wave of the pandemic. In addition, there are signs that the supply on the black gold market will grow significantly, which also puts a lot of pressure on oil quotes.
Meanwhile, a sharp jump in the supply of crude oil from Iraqi companies for November delivery was observed on Thursday. This may mean that the country has started to increase the volume of hydrocarbon production. However, the situation should be the opposite: Iraq should fulfill its obligations to OPEC to reduce oil production. Moreover, the country did not fully reduce its production in previous periods and remained in debt under the contract. Iraq has initially recognized its debt and guarantees that all obligations will be fully fulfilled by the end of this year. The news about the increase in supply suggests otherwise.
This week, another oil producer from Libya, National Oil Corp., announced that it also intends to start production of raw materials after a long break associated with the blocking of oil fields and ports for eight months in a row. To date, an agreement has been reached with the government of Tripoli, which will allow the resumption of the development of oil fields. This means that the growth of supply in the market will increase even more with extremely low demand.
The main trend in the crude oil market remains bearish. And this is not only due to the production increase in Libya and Iraq but also due to the growing cases of the coronavirus infection. Many countries in Europe are already recording a great number of cases which makes the second wave of the pandemic inevitable. Even the news of a reduction in raw material stocks no longer supports the market as it used to.
At present, quite numerous significant negative factors bombard the oil market. However, market participants are still mostly concerned that the demand for hydrocarbons will inevitably go down in the near future.
The price of futures contracts for Brent crude oil for delivery in November on the trading floor in London rose 0.45% or $ 0.19, which moved it to the level of $ 42.13 per barrel. Thursday's trading ended with an increase of 0.4% or $ 0.17, and the final price was fixed in the range of $ 41.94 per barrel.
The price of futures contracts for WTI crude oil for delivery in November on the electronic trading platform in New York went up by 0.5% or $ 0.2, leaving the current mark at $ 40.51 per barrel. Thursday's trading session ended on a positive note with an increase of 0.1% or $ 0.38. The final price was fixed at $ 40.31 per barrel.
The increase in the price of both brands above the strategically and psychologically important $ 40 per barrel mark can be considered positive news. However, there is still no assurance that it will manage to stay in the same position for the long-term due to the negative fundamental background.
As a result, since the beginning of this week, the price of Brent crude oil has fallen by 2.1%, while WTI crude oil has fallen by 1.7%.
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