Over the past 6 weeks, there was an increase in oil prices. However, today, on June 15, oil prices collapsed by 8.3%. According to experts, the oil price rally is possible, but only when demand returns to the previous levels.
The extension of the oil output reduction to the levels logged in May and June that is 9.7 million barrels per day provided short-term support to the oil market. In May and June, Saudi Arabia and its partners (Kuwait, the United Arab Emirates) voluntarily cut production more than it was established by the agreement. At the moment, they intend to reduce their July's production according to quota obligations. At the same time, Mexico agreed to cut output only by 100 thousand barrels per day.
PVM OIL Associates analysts previously warned that excessive optimism could be dangerous and we should not underestimate the economic consequences of the coronavirus and the threat of new restrictive measures.
In the US, the number of COVID-19 cases is rising again. Thus, the US authorities are discussing new restrictions in the economy that could sharply hit the demand for raw materials and return the threat of filling storage facilities.
The price of Brent crude dropped by 3.18% to $37.5 per barrel and WTI oil lost 4.55% to trade at $34.61. Andy Lipow, president of Lipow Oil Associates, said that prices would remain in the range of $35 - $40 per barrel.
