The price of oil rose Tuesday, in a market continuing to assess the implications of the extension of the agreement on the reduction of the production, found Saturday between the main countries exporting black gold.
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a barrel of Brent North sea for delivery in August finished at 41,18 dollars in London, an increase of 0.9%, or 38 cents compared to the closing of Monday. In New York, the barrel american WTI for the month of July gained 2 per cent or 75 cents, to 38,94 dollars.
the members of the Organization of petroleum exporting countries (Opec) and its allies, including Russia, joined together in the Opec+, agreed Saturday to extend in July the reduction in production history to which they compel themselves, since the 1st of may. “The major oil producers are hoping that the decrease in their production will help the rise of prices, as well as the strengthening of the application with the return to normal of the economy, as allowed by the déconfinement”, noted analysts from TD Securities.
“mixed Reception” of the agreement of the Opec+
Several observers have, however, cautioned against optimism too early, recalling that the course had fallen on Monday and that they have evolved into negative territory a good part of Tuesday’s session before a little bounce before the close. “There are several reasons for the mixed reception by the market” of this agreement constituting “the production cuts the most important of the” story ” has advanced Tamas Varga, analyst at PVM. First, the duration of an extra month “may not be sufficient to significantly reduce stocks of oil.”
In addition, “the clarification of the position of saudi arabia regarding their cuts voluntary does not help” to maintain prices, according to him. The saudi minister of Energy, the prince Abdelaziz bin Salman, said Monday at a press conference post meeting of the Opec+ the cuts voluntary granted by his country, along with Kuwait and the united arab Emirates, were “for a month” and would thus come to an end.
Tamas Varga adds that the market “always has reservations as to the strict observance of the rules” by the member countries of the agreement, including some such as Iraq and Nigeria exceed their production quotas. The agreement reached Saturday requires that these countries should not only comply with, but restrict their productions between July and September.
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