Seasonal barrel: what can affect the price of oil fall

Seasonal barrel: what can affect the price of oil asegurada link
On 8 September 2019, 18:25

Nikita Bondarenko
With the onset of autumn the world prices for oil have partially restored its position after a serious fall in August. Analysts point out that the turbulence on the raw materials market is related to trade wars and sanctions pressure against Iran. For the price of a barrel also influenced by the agreement on the reduction of oil production in the OPEC countries and the situation on the energy market of the United States. How can change the price of oil fall out at RT.

  • Reuters
  • © Lucy Nicholson

Investors of the oil market is concerned about the situation in the global economy. This convinced analysts that bring in an example of quote dynamics. So, in June and July they reached a level of $66 per barrel. But in August was the largest since the collapse in prices to $56. By the early fall of oil prices partly pared losses and is now trading near $60.

«Oil prices declined after a report on manufacturing activity in the US it fell for the first time in three years, and the European Union continued the decline that began seven months ago,» commented RT the dynamics of oil prices, the expert of the Academy of management Finance and investment Gennady Nikolaev.

According to IHS, Markit, the purchasing managers ‘ index (PMI) in the industrial sector of the USA fell to the level of 50.3 points. The value was the lowest in a decade.

Deterioration of the production occurs on the background of a trade war States with China. Gennady Nikolaev explained that trade restrictions of the United States against China broke the global chain of sales and has hit so many countries dependent on exports.

«The world economy is sinking into recession, which should have a negative impact on demand for raw materials. Thus, oil will be under pressure until the US and China will not resolve the contentious issues. Until then, the potential of growth of quotations is extremely limited. However, this week there was positive news about a record for three months the growth of activity in the Chinese service sector, which revived the commodity market. But most likely, it is now a single positive case,» — said the expert.

Political decisions

Expert International financial centre Gaidar Hasanov in conversation with RT said that a trade war nullify the efforts of OPEC to stabilize the oil market and prevent prices to fall.

According to the latest report published on the organization’s website, States, OPEC reduced oil production in July to 246 thousand barrels per day.

However, Gaidar Hasanov noted that the escalation of trade wars freeze production will not be enough.


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«OPEC don’t have long to wait for the outcome of the conflict, they need to develop measures that not only would have stopped and stabilized oil prices, but turned the trend towards growth. The revision of quotas to reduce production is now a priority plan, which could keep prices at around $60 per barrel,» — said the expert.

According to the chief analyst GK TeleTrade Peter Pushkarev, new commitments to OPEC to limit production can accelerate the growth of prices up to $65. However, the expert did not rule out that the possible increase of oil production in the US will provoke a decrease in quotations to $50.

The price level is able to influence the situation in Iran, said Pushkarev. Earlier the President of France Emmanuel macron proposed a plan under which Iran will provide a loan of $15 billion to save the nuclear deal and this would allow Europe buy Iranian oil.

However, as reported TASS, citing the Iranian TV, during the talks, Iran refused credit because of the reluctance of official Washington to return to a nuclear deal.

Counter expectations

In an interview with RT the head of the analytical Department of «Finist» Katya Frankel predicted for the fall of the price of a barrel of Brent crude oil in the range of $55-60. However, the strengthening of negative factors, the expert allowed a reduction of up to $53-55 in October.

Gaidar Hasanov suggested that clarity in the energy market can appear as early as next week.

«On September 12 in Abu Dhabi will host the Ministerial meeting of OPEC countries, which will analyzed the situation on the global oil market and developed measures to reduce the negative effect of trade wars. Major market participants are expecting this event to implement a strategic balance of power on the commodity market. While oil prices are also bound energy departments of the US crude oil inventories. In this regard, the price range for oil will range from $57 to $60,5 per barrel,» — said the expert.

Meanwhile, RT interviewed analysts believe that the possible reduction of oil prices in the autumn will not have a serious effect on the Russian economy.

«Given that the Ministry of Finance has budgeted the price of oil at $40-45 per barrel, the fall will not affect the country’s economy. In December 2018, the price of oil fell to $42 per barrel, however, Russia has not suffered from this,» concluded Katya Frankel.

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