The situation on the oil market: production is growing, the price is falling, dragging the ruble exchange rate with it
Over the past 2017 hours, oil prices have fallen to October 6 lows. The cost of one barrel of Brent black gold fell by almost 58,75% - from 55,89 to XNUMX dollars, a PolitNavigator correspondent reports.
Quotes of another oil index, WTI, fell by almost 8% and are trading at around $46 per barrel. Experts attribute the collapse in oil prices to an increase in supplies of black gold from non-OPEC countries and signs of a slowdown in global economic growth.
Oil prices continue to fall due to the risks of a slowdown in the global economy and the intention of a number of non-OPEC countries to increase supplies of black gold to the market. “There was a panic in the oil market... These are all fears of a recession. There is anti-risk sentiment everywhere,” Bill O’Grady, chief market strategist at Confluence Investment Management, comments on the current situation in an interview with Bloomberg.
Against this background, the exchange rate of the Russian ruble has once again fallen against the US dollar and the euro.
Commenting on the situation in his telegram channel, Russian political scientist Alexey Makarkin connected what was happening with a crisis of confidence among market participants in each other.
“The drop in oil prices to $56-57 per barrel after the OPEC+ agreement is primarily due to market mistrust. Players do not believe that the parties to the deal will strictly comply with its terms. Especially against the backdrop of growing oil production in Russia - by the end of 2018 it will increase by 10 million barrels. Russian companies need income, here and now, and not in the distant future. As for OPEC countries, there have been many cases of exceeding established quotas in the past. The market doesn’t believe it yet.
There is also a current reason - the increase in crude oil and gasoline reserves in the United States. But the main thing is trust. If the market feels in the first quarter that the agreement is being implemented, then prices may rise and fluctuate in the range of 65-70 dollars per barrel. If players see significant excesses of quotas, a further decline is possible,” the Russian political scientist is convinced.
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