Oil: freezing without freezing. Prices will rise to 60 dollars

Oil prices principal reference varieties at the end of August marked the most rapid growth since April as market participants are laid on the fact that an informal meeting of OPEC and non-OPEC in Algeria in September may complete agreement to freeze production at the current level.

Contracts on the European Brent crude oil with a term expiration in October on the ICE futures exchange in London on 31 August at 11.20 Moscow time at the end of the month was added 11.7% to 48.30 dollars per barrel. At the same time the us benchmark WTI rose in price by 11.5% and was at the level of 46.92 per barrel.

According to preliminary data, the meeting in Algeria will be held on September 26-28.

Unlike previous times the chances of reaching an agreement this time much higher. In the month of June in Vienna, Saudi Arabia, in fact, sabotaged the signing of the agreement, saying, do not go for freezing, if you do not Iran, who officially announced that he will not restore former production levels participate in this kind of agreements can not go.

According to news Agency Bloomberg, oil production in Iran in August was 3.6 million barrels per day. The historical peak was 4.1 million barrels, and at the time of introduction of sanctions of approximately 3.6 million. In fact, it can be noted that Iran came to the previous level of production and at the moment will be interested in maintaining higher prices. Investment in increasing production volumes until he’s hard.

Local media in Iran reported that the country will take part in the meeting in Algeria. The Minister of energy of Saudi Arabia in an interview with Bloomberg said that the freezing may have a positive impact on the state of supply and demand.

Thus, the main conflicting parties honk the desire to find compromises and to support prices. It is also important that Iraq had expressed its full readiness to support an agreement. Iraq was one of the main members of OPEC, production growth of which broke the balance between supply and demand.

Prices reacted positively to rising chances of signing the agreement, but we tend to believe that they will remain at the same level, even if it is achieved.

Currently a number of major market players are concerned not to increase production, but at least keep the current volume. The volume of production has declined in Venezuela by 200 thousand barrels per day. Declined significantly in Nigeria and almost had a clean slate in Libya. Approximately 300 thousand a day lost, and Russia. USA lost 800 thousand barrels per day with a peak in 2014. Freezing happened by itself, but when you consider investment losses for the global industry at $ 1 trillion dollars since the crisis began, the long-term prospects ol izlojeniya look weak. While demand will grow by 1.5 million barrels a day per year until at least 2020.

We believe that as of the end of the holiday season in the United States, oil prices can fluctuate in the range of 45-55 dollars per barrel, and by the beginning of the heating season to create a trend in the direction of $ 60 and can even rise to 70 dollars by the end of 2017.

Oil: freezing without freezing. Prices will rise to 60 dollars 31.08.2016

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