Global oil prices are to seesaw around $40.00 a
barrel for some time owing to yet another supply glut.
The EIA, the US Energy Information Agency, reports a
steady decline in US exports since February, which can only indicate a fall in global
demand in proportion.
Since producers are beginning their activities, even
at a slower pace, that can only mean the expansion of the supply side of the
equation; for most, if not all, of them, it’s a matter of stay relevant in the
sector in the long run.
The burden on the supply side that weighs on the
market did get little help from the news that China has slowed down oil imports
– a far cry from its inventory building spree in April-May period.
In India, meanwhile, the demand in diesel has fallen
rapidly as coronavirus infections go up unabated. Even India that saved above
$685 million with its accelerated oil stock building may see little enthusiasm
to expand the activities on this front, due to both logistical reasons and
demand concerns.
The anticipated input of oil from Libya and Iraq, in
addition to that will come from new players in the field from Africa, could
potentially push the supply level up by a few notches in the coming months.
In anticipating the crisis of crude oil price, the
OPEC+ may be compelled to introduce yet another production cut; based on the
ground realities, however, the top members know it is easier said than done.
In these circumstance, only a breakthrough in
dealing with the coronavirus can stimulate a desirable upward trend in the oil
markets; the rest is just wishful
thinking.
