Oil breaks the upswing after 7 consecutive weeks of gains 2021-03-14T19:22:17 Oil breaks the upswing after 7 consecutive weeks of gains Oil breaks the upswing: Brent crude price failed to reach $ 70 a barrel last week. In fact, oil prices still receive support from low production by major oil producers and optimism regarding demand recovery during the second half of this year. Last Friday, Brent crude price for May 2021 delivery, retreated by 41 cents or 0.6% to record $ 69.22 a barrel. Similarly, West Texas Intermediate for April 2021 delivery, declined by 41 cents to reach $ 65.61 a barrel. However, both Brent and West Texas Intermediate ended the week unchanged after prices touched their highest levels for a short period during 13 months, on Monday. This took place after 7 consecutive weeks of gains. Request for the most dangerous assets such as oil is still supported by the White House aid package and optimistic results of vaccines on a daily basis. the Organisation of Petroleum Exporting Countries (OPEC) For its part, the Organisation of Petroleum Exporting Countries (OPEC) expects a stronger recovery in demand for oil this year. This casts its weight in the second half of this year. Last week, OPEC with its allies and Russia decided to keep restrictions of production almost unchanged. The US oil producers were slowed down as they reduced numbers of operating oil and natural gas platforms for the first time since November, according to data by Baker Hughes. Analysts said that the most strong recovery expected in the second half of this year indicates that the global economy will recover. Therefore, expectations of oil demand will be approaching the elimination of Covid-19 effects. The continued rise in oil prices is expected to encourage American producers to increase production which finally may by its turn affect prices, according to JPMorgan notes. JPMorgan estimates JPMorgan estimates that the average US oil production will reach 11.36 million barrels a day during this year compared to 11.32 million barrels a day in 2020. Earlier this week, the US government amended its expected reduction in 2021 for its crude production. Production is expected to be reduced by 160,000 barrels a day to reach 11.15 million barrels a day. This decline is slower than previous monthly expectations of a decline by 290,000 barrels a day. Oil prices during a week According to data by Evest, oil prices fell during the first two sessions of the week (8-9 March), due to the pressure of the strong dollar. Sources showed that US crude inventories rose by 12.8 million barrels in the week ending on March 5, overheating expectations of an increase by 816, 000 barrels which were expected by analysts in a Reuters poll. The black gold Market The black gold Market had recorded positive movements during the following two sessions (10-11 March), thanks to optimistic expectations of the momentum of global economic growth of the organization for economic cooperation and development (OECD) and a sharp decline in gasoline reserves in the United States of America. In addition, oil prices are also benefiting after US President Joe Biden signed on 3/11 an economic stimulus worth the US $ 1.9 billion. The growth of economic expectations will enhance the demand for fuel next time. At the last session of the week 12/3, the market was corrected after the two previous sessions of gains. At the end of the session, North Brent oil price fell by 0.4 cents or 0.6% to record $ 69.22 a barrel, after it closed at its highest level during March 11 since May 28 in 2019. The US light crude oil (WTI) Meanwhile, US light crude oil (WTI) declined by 0.4 cents or 0.6%, to close at $ 65.6 a barrel. Throughout the week, Brent and West Texas oil prices retreated by 0.2% and 0.7% in a row. Thus, the results of this week put an end to the rise in Brent oil prices all over 7 consecutive weeks. Despite the decision adopted by the Organisation of Petroleum Exporting Countries (OPEC) and oil-producing countries, earlier in this month, regarding extending reduction of production till April, oil prices have not been more increasing this week, as huge global oil reserves can compensate for risks of reduction in supplies in short term. Saudi oil installations News that was issued earlier this week for attacks on Saudi oil installations, also failed to maintain rising oil prices for a long period of time. Due to the large surplus of all major producers at present, supply concerns because of issues such as tensions in the Middle East or geopolitical risks are inappropriate, because if any state stops production, another one will compensate for its production. Therefore, until the market returns to a balance of supply and demand, oil prices will be determined based on OPEC’s discipline of application policy and demand recovery. Why did oil decline and did not complete its rising? On Friday, oil prices fell, after a week full of events which were distinguished by increasing crude stocks, in the United States in addition to rising bond prices. On Friday, interest rates of US Treasury bonds for 10 years, began to rise once again to exceed 1.64% during the session. This is the highest level in a year. There are also some profit takings during waiting to know how US refineries will resume their activities when they were closed during cold wave in mid-February and recently entered maintenance season. This week, crude oil prices will be targeting the high risings of last Monday. At the beginning of the week, West Texas Intermediate crude oil recorded $ 67.98 a barrel. This is the first time since October 2018. On the same day, Brent crude oil briefly exceeded a barrier of $ 70, approaching its former record on January 8, 2020. OPEC’s last report On Friday, in particular, investors adopted data involved by the Organisation of Petroleum Exporting Countries (OPEC) on the previous day. In its latest monthly report, Organisation has adjusted its positive forecasts to increase recovery in global demand for black gold this year. Now, this is expected to be about 5.9 million barrels of oil a day, to reach 96.3 million barrels a day. In its last report of markets, OPEC said that there was a wave of financial stimulation in place and that continued deployment of the Covid-19 vaccine in many countries will increase prospects for economic growth. This year, demand for oil will significantly increase. Organisation expects that global oil demand will rise by about 200,000 barrels a day and it also expects that the world economy will grow by 5.1%, or by about 0.3%, thanks to 2 main factors: a US stimulus package worth $ 1.9 billion and continuing recovery of economics in Asia. However, OPEC also expects unexpected volatility in the oil market during the coming months. Estimates indicate that demand for oil in the first 6 months of 2021 will fall because of measures to reduce economic activity due to the epidemic. Demand for oi will increase during the second half of 2021 because of an acceleration of economic activity, as the epidemic is likely to be relatively settled by that time.