Oil prices are reduced at the beginning of the week
oil prices on Friday remained stable. Key factors affecting prices remain relevant and partially compensate for each other. On the one hand, the increasing pressure continues to exert the risks on the side of the proposals, mainly related to restrictions on the supply of Russian oil and the deficiency of free production capacities of OPEC.
on the other hand, high prices are already beginning to have a destructive effect on demand, while fuel consumption in China was affected by quarantine in Shanghai.
This morning, Brent futures are reduced due to weak statistics from China. The duration of the June contracts expires, so the observation will be carried out in the July futures. From a technical point of view, the quotes on Friday unfolded in the area of the inclined line of resistance, which may portend a further decline. Care below 105 rubles. It may be the first signal about the corresponding development of events. The correction potential can be located in the region of $ 100 per barrel.
consumption In China
on Saturday, China published data showing a decline in production activity to the lowest level from February 2020 by CAIXIN polls, many enterprises are concerned about the timing of existing Locksa due to Covid-19. Shanghai has been in quarantine for 4 weeks, at the end of last week partial restrictions were introduced in Beijing, which can be expanded if mass testing shows too many positive results.
for oil prices, a decline in economic activity in China is a negative factor, since this negatively affects demand in the country, the second largest consumer of liquid fuel in the world.
Reuters reported on Friday that Indian refinery was negotiating a half -year agreement with Russia on oil supplies in the volume of several million barrels. per month. According to Royal Bank of Canada, Indian oil import from Russia grew from 100 thousand b/s in 2021 to 800 thousand used in April. The growth of deliveries to India softens the negative effect associated with the refusal of a number of European consumers from Russian oil.
Prospects for a full -fledged embargo on Russian oil in the EU remain vague. Judging by the information in the media, members of the European Union cannot come to a consensus on this issue. A number of countries are not ready to quickly abandon raw materials from Russia, sacrificing their economy. By the end of May, the European Commission may consider the option of so -called “smart sanctions”, which implies a step -by -step rejection of Russian raw materials and the establishment of increased imported tariffs. The specifics on this topic have not yet appeared.
The situation in Libya
Libyan oil company (NOC) on Sunday said that it would temporarily resume work on the Zueitina export terminal to reduce oil reserves in tanks. Earlier, the country was forced to suspend the production of about 350 thousand b/s due to the blocking of this terminal and a number of other oil infrastructure facilities. A temporary opening can slightly soften the supply of supplies in world markets, although quotes, as a rule, react very restrained to news from Libya. The country It is experiencing a protracted domestic political conflict, which is why production regularly jumps in a wide range, and market participants are already accustomed to temporary interruptions.
Drilling in the USA
the number of drilling in the United States continues to grow very slowly. Last week, Baker Hughes counted only 3 new oil plants in addition to the current 549 lips. At the same time, in Canada, the number of active attitudes decreased by the same 3 units. Despite the sharp increase in the number of drilling permits obtained in March, we still do not see this effect on real drilling activity. This does not allow you to revise forecasts for American production before the end of the year, which, according to EIA, by December will be 12.6 million used or 12 million b/s on average year.
this morning Brent futures are reduced by 0.8% to the level of closing the previous day and are traded in the region of $ 106.2 per barrel.