Baku. 11 March. REPORT.AZ/ In the coming weeks, oil prices could fell sharply.
Report informs referring to Forexpf.Ru, the reason for that may be the fundamental factors which do not correspond to the current stock valuations. Price can go to the level of $ 30 a barrel as soon as the markets realize the futility of the idea of freezing production levels in OPEC + Russia format. Returning to the realities of excess in supply and weak world economy can significantly drop the price into the range of $30-20 per barrel.
Experts believe that the decline in production in the OPEC + Russia format would be a big step towards the restoration of balance in the oil market.This may occur later in 2016, but at the moment this issue is not on the agenda.
Saudi Arabia and Russia are among the world's largest oil producers.Thus in January 2016 the Saudis production of liquid hydrocarbons by only 110 thousand. barrels/day higher than the figure of January 2014, and Russia compared with the same period reduced the volume of actual production by 50 thousand barrels/day.At the moment, the size of the global overproduction exceeds 2 million barrels/day.
In contrast, the United States, together with Canada have increased production by 1.9 million barrels/day in comparison with January 2014, and Iraq's oil production increased by 1.7 million barrels/day.In addition, Iran's potential allows it to increase the production volume for 2016 to 1 million barrels/day.
"For a week on February 26 oil storage facilities in the United States grew by an impressive 10.4 mln barrels, the biggest gain since the beginning of April 2015.As a result, the total amount of reserves by 162 million barrels higher than the average figure for 2010-2014, and by 74 million barrels - inflated levels of 2015 ", analysts say.
The degree of correlation between the index of stocks in the US and world oil prices is high. The terminal in Cushing, Oklahoma (PADD 2) and reservoirs in the Gulf Coast (PADD 3) form nearly 70% of all stocks that are stored in the United States and play a key role in the formation of WTI crude prices.
When the stock exceeds the value of 80% of the capacity limit, oil prices generally tend to fail.NowCushing stocks made 91% of the storage capacity Gulf of Mexico reservoirs filled by 87%, and this gives in total 88% of component.
Experts point out that a significant rise in oil prices will not happen as long as the stock size not reduced, there is no need to count as long as the US does not reduce the production volumes by approximately 1 mln barrels/day.