The price of oil soared on Wednesday after a series of declines for the past few days. Investors are still tense in anticipation of the next meeting of OPEC ministers, on July 15, Wednesday. In addition to this, the next batch of statistics on stocks of raw materials, gasoline, and distillates in the United States of America will be released. All of this will determine the further dynamics of prices in the oil market.
The OPEC administration issued a preliminary forecast for oil demand on Tuesday which was adjusted for the better. This year, according to the organization, demand will grow by about 100 thousand barrels per day, which will allow it to reach 90.7 million barrels per day. However, this figure will still be lower than that recorded for the same period of the previous year. In light of the situation with the pandemic, there was a decrease of 8.9 million barrels per day. Estimates for next year also indicate growth to 97.7 million barrels per day, but this will be a very limited increase.
The OPEC ministerial meeting is expected to discuss the systematic removal of restrictions on the extraction of crude oil, which should occur according to the agreement signed in April this year. The second phase of the contract involves a partial recovery of production. Thus, the total decline will now be at around 7.7 million barrels per day. There is no good reason for a deal to be reconsidered. Most likely, the second part will remain unchanged and will enter into force in August of this year.
At the same time, the price of crude oil continues to be kept at a stable level, ignoring news of future mitigation of production. Nor does the fact that OPEC plans to introduce additional penalties for lagging members who have not fully fulfilled their obligations in the form of limiting production to 842 thousand barrels per day during August and September. These said states include Kazakhstan, Iraq, and Nigeria.
Meanwhile, oil reserves in the United States decreased by 8.3 million barrels over the previous week. Gasoline stocks also adjusted downward by 3.6 million barrels, while distillates, on the contrary, showed growth by 3 million barrels. At the same time, reserves at the strategically important storage in Cushing rose by 548 thousand barrels.
The price of futures contracts for delivery in September for Brent crude oil on the trading floor in London rose by 0.33% or $0.14. Now its value is within $43.04 per barrel. On Tuesday, the trading session also ended positively with an increase of 0.4% or $0.18, which was $42.9 per barrel. This growth, of course, has not yet compensated for the losses that have occurred over the previous days but have become clear evidence of a change in trend.
The price of futures contracts for delivery in August for WTI light crude oil at an electronic trading platform in New York also rushed up by 0.35% or $0.14, which reflected the level of $40.43 per barrel. Tuesday's trading ended with an increase of 0.5% or $0.19, showing the dynamics of up to $40.29 per barrel. Oil was able to again step over its psychologically important mark of $ 40 per barrel, which most likely indicates that it has again found solid ground under its feet and is ready for further growth.
Several factors provided support for black gold and among these is the weakening of the greenback which has a favorable effect on oil prices. The improved forecast from OPEC also cheered up market participants. Now the main attention is directed towards the OPEC decision, which will be known tonight. However, there is already information that countries such as Saudi Arabia and Russia plan to make their oil production higher next month. It is likely that this step will contribute to a negative rollback in the oil market, and in the long term, a drastic change in the trend to "bearish" may occur. While there is no official data, investors continue to be positive.