Oil prices to see ‘stop-start’ recovery

Oil prices to see ‘stop-start’ recovery

BAKU, Azerbaijan, Sept.17

By Leman Zeynalova – Trend:

After two months of tightly rangebound, sideways trading across July and August, oil prices have taken a tumble in September, Trend reports with reference to Fitch Solutions.

“While this is at least in part due to broader market selloffs, it is also testament to generally weak sentiment towards oil. Positioning in Brent futures has grown steadily more bearish since August and is currently approaching the levels last seen during the market crash over March to April. Such sentiment leaves prices heavily exposed to any signs of fundamental weakness. In light of this, a spate of disappointing economic data and signs of resurgence of Covid-19 in key markets (including parts of the EU, Japan and India) have damaged price action in Brent, with scope for further downside, should conditions continue to deteriorate.

“While the underlying fundamentals should continue to improve over the coming quarters, we expect to see a ‘stop-start’ recovery in prices. Despite recent wobbles in the market, our economists note that leading indicators point to continued improvements in the global economy, while the policy backdrop remains supportive of growth. Meanwhile, more favourable base effects should flatter growth next year. Nevertheless, their belief remains that the road to recovery will remain bumpy and uneven, as countries tackle the virus with varying success. Given that many of the major emerging market consumers are among those countries that are struggling most to contain the spread, this is problematic for oil. More broadly, the ebb and flow and coronavirus containment measures will likely feed through into bouts of acceleration and deceleration of demand growth, which will - at the least - affect the pace of the market's rebalancing and, at an extreme, could tip the balance between deficit and surplus.

“A blinkered focus on the demand side is deflecting attention from substantial risks on the supply side and we see increasing scope for a market shock in 2021. Overwhelmingly, we see price action being led by developments on the demand side and broader shifts in sentiment related to Covid-19. However, the risks on the supply side are significant and growing. Between the OPEC+ production cut deal and supply outages in Libya and Iran, around 10.0mn b/d of supply (c. 10.0% of global production) is being held artificially out of the market. The bulk of this could feasibly be returned over a period of months.

“In Libya, c.1.0mn b/d of supply has been shut in, as result of the ongoing conflict between rival factions to the east and west of the country. A recent pledge by Khalifa Haftar - leader of the Libyan National Army - to reopen the blockaded ports could see this supply return over the coming months. While the market has grown relatively insensitive to (highly volatile) Libyan output, the growth in production could derail the global rebalancing of supply and demand, at least over the short run. Further to this, Joe Biden's pledge to re-engage with Iran could see around 2.5mn b/d of supply returned to market over 2021, should President Trump lose the upcoming election and Iran move rapidly back into compliance with the nuclear accord. This is turn raises question marks over the fate of the OPEC+ production cut agreement. Cohesion is anyway likely to fray, the longer the deal remains in place. But strong growth in markets outside of the group will likely accelerate this process and substantially weakens the prospects for any deepening or extension of the existing cuts, in response to renewed weakness in demand,” reads the analysis released by Fitch Solutions.


Follow the author on Twitter: @Lyaman_Zeyn

Subscribe to Trend in Google News! Subscribe
Erdogan arrives in Angola in first leg of Africa tour
Erdogan arrives in Angola in first leg of Africa tour
Facebook plans to hire 10,000 in EU to build 'metaverse'
Facebook plans to hire 10,000 in EU to build 'metaverse'
French ambassador leaves Belarus - embassy
French ambassador leaves Belarus - embassy
Loading Bars
Israel reports rise in cyberattack attempts against hospitals
Erdogan arrives in Angola in first leg of Africa tour
Facebook plans to hire 10,000 in EU to build 'metaverse'
At least one dead, several injured in shooting incident in U.S.
UK to fund new nuclear power station as part of net zero drive
Former U.S. president Clinton released from hospital
U.S. administers 408.3 mln doses of COVID-19 vaccines - CDC
French ambassador leaves Belarus - embassy
Google dedicates doodle to Azerbaijan's Restoration of Independence Day
Chronicles of Victory: President Aliyev announces that Azerbaijan's armed forces raise Azerbaijan's flag over ancient Khudaferin Bridge (VIDEO)
Chronicles of Victory: October 18, 2020
Georgian CEC calls on public to participate in October 30 municipal run-offs
Turkey expresses interest in expanding activities of Turkish companies in Kyrgyzstan
Helicopter crash kills three in Germany
As soon as possible, we will return to their native lands IDPs who lived in suffering for 30 years - Azerbaijani president
Heydar Aliyev did not allow holding of referendum on preservation of Soviet Union in Nakhchivan - President Aliyev
Celebrating October 18 solemnly or thanking someone for it is absolutely inappropriate, says Azerbaijani president
UK records more than 40,000 COVID cases for fifth day in a row
Cargo movements in Iran’s Qeshm port up
Amendments related to national holidays completely correspond to historical realities - Azerbaijani president
First VP of Azerbaijan makes Instagram post after meeting with heroes of Second Karabakh war (PHOTO)
Georgia faces fifth Covid-19 wave, observing recommendations much needed, NCDC Head says
UNHCR opens alternative route of aid to Afghanistan via Uzbekistan
Azerbaijan allocates funds for construction of Fuzuli Memorial Complex
Master plans of Zangilan, Gubadly, Kalbajar and Lachin being developed - Azerbaijani president
Azerbaijani economy grows by about 5%, non-oil economy by 20% over 9 months - President Aliyev
Large settlement will be created based on "smart village" concept in village of Dovletyarly - Azerbaijani president
We significantly brought closer day of IDPs return to their homelands - President Aliyev
Projects under implementation in Fuzuli show our determination and potential - Azerbaijani president
We will restore Fuzuli city, settlements of Fuzuli district - President Aliyev
Every person who visits Fuzuli becomes witness of Armenian vandalism and no one can deny this, says Azerbaijani president
This glorious victory will forever remain in history of Azerbaijan - President Ilham Aliyev
After liberation of Fuzuli, cases of desertion in Armenian army became even more widespread - President Aliyev
After Fuzuli was liberated it created more opportunities to move towards Shusha - President Aliyev
President Ilham Aliyev and First Lady Mehriban Aliyeva view conditions created at Fuzuli International Airport
Azerbaijan shares data on number of vaccinated citizens
Azerbaijan confirms 1,896 more COVID-19 cases, 764 recoveries
Azerbaijani president, first lady meet with members of Fuzuli district's general public (PHOTO)
Azerbaijani president, first lady view conditions created in Fuzuli Central City Park, plant trees there
President Aliyev lays foundation for Digital Substation Management Center in Fuzuli
President Ilham Aliyev lays foundation stone for Fuzuli Memorial Complex, city of Fuzuli
Liberation of Fuzuli during war was very important - President Ilham Aliyev
October 17 will forever have special place in history - President Ilham Aliyev
President Aliyev lays foundation stones for Fuzuli-Aghdam highway and new “smart village” in Fuzuli (PHOTO)
President Ilham Aliyev and First Lady Mehriban Aliyeva visit Fuzuli district (PHOTO/VIDEO)
Ukrainian MPs visit Ganja where cilivians died as result of missile attacks by Armenia (PHOTOS)
Iran reveals COVID-19 data for October 17
BSEC SG to visit Georgia today
Over 600 COVID-19 patients in Kazakhstan in critical condition
Energy Community highlights leading energy projects implemented in Georgia
First concert of Azerbaijan's trio under leadership Isfar Sarabsky takes place as part of European tour (PHOTO/VIDEO)
Buy/sell operations at Iran Mercantile Exchange soar
Graduation ceremony of Azerbaijani servicemen participating in courses held in Turkey
Heavy rains lash India's Kerala, red alert sounded in 5 districts
Share of households with internet access increases in Georgia
Seventeen U.S. missionaries and family kidnapped in Haiti
Iranian private investments in Tajikistan expected to grow
1,900 new COVID-19 cases reported in Kazakhstan
IRICA unveils data on exports of Iran to Belarus
Azerbaijan national team takes second place at Grand Slam judo tournament
8 killed, over 20 injured in traffic accident in Peru
1 deputy killed, 2 injured in "ambush shooting" in U.S. Texas
Israel's active COVID-19 cases below 20,000
At least 6 dead, 1 missing after ship sinks in Brazil
Azerbaijani Foreign Ministry shares publication in connection with anniversary of Armenia's missile attack on Ganja
Information about firing of Azerbaijani army in direction of Arazdeyen does not reflect truth - Ministry of Defense
Sudan protest calls for military coup as political crisis deepens
Chronicles of Victory: President Ilham Aliyev addresses the nation on October 17, 2020 (PHOTO/VIDEO)
Chronicles of Victory: October 17, 2020
District Election Commissions to sum up protocols of municipal polls in Georgia
A working meeting of the delegations of Uzbekistan and Afghanistan takes place
Russian authorities say 18 dead in suspected alcohol poisoning in Yekaterinburg
UN chief welcomes unilateral cease-fire in CAR
Iran’s Bahar Azadi gold coin price continues to rise
Work on increasing wages, pensions and benefits begins - Ministry of Finance of Azerbaijan
Official talks reasons for increase in gas prices in Azerbaijan
Post-conflict reconstruction projects launched by President Ilham Aliyev is unprecedented - Aide to President (VIDEO)
Azerbaijani IDEA signs agreement with All-Russian Society for Nature Conservation (PHOTO)
Saudi Arabia's PIF launches offshore platform tourism project
NATO Special Representative for Caucasus to visit Azerbaijan
Iran's Energy Exchange announces products to be on sale on October 17
Iran reaches grow in exports to Kyrgyzstan
World gas prices grow by 20-30 times compared to last year - SOCAR
Latvia to gift Georgia 83,070 doses of Pfizer jab
Earthquake hits southern Iran
Azerbaijan shares data on number of vaccinated citizens
Azerbaijan confirms 1,681 more COVID-19 cases, 675 recoveries
South Caucasus countries need to coordinate to open communications - Pakistani diplomat
Azerbaijani President Ilham Aliyev signs decree on raising social payments
Iran reveals COVID-19 data for October 16
Uzbekistan to privatize public park in Tashkent
Muslims all together sympathetic with Azerbaijan - Palestinian ambassador
Iran's exports to Kazakhstan up
SOCAR Georgia Gas opens tender on pickup trucks through operating lease
Turkish president and German chancellor holding talks in Istanbul
Novak does not rule out recurrence of energy crisis in Europe, urges its prevention
Azerbaijani official talks victims of Armenian attacks on Tartar during Second Karabakh War
Centuries needed to revive nature of Azerbaijan's Karabakh - minister
Azerbaijan raises electricity and gas prices
Restoration work in Azerbaijan’s liberated territories show positive trend – Kyrgyz ambassador
All news