Oil cautiously enters the growth area

Oil prices with caution go to the territory of moderate growth at the beginning of the week.

01.Aug.17 11:53 PM
By Swan
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Participants in the oil market allow themselves to release acute panic finally. The reason for the formation of an average active on the market is, as geopolitical factors, and the data of the American oil industry. Geopolitical factors of oil support shortly will mainly depend on how the issue of the US sanctions on Venezuela, where a full-fledged civil war rages, will be resolved. The States said at the end of last week that they are seriously considering the option of imposing an embargo on the import of Venezuelan oil for American refineries, which in quantitative terms will result in the loss of an export channel for a South American exporter of 750,000 barrels. / Day. To date, the White House has limited itself to the imposition of personal sanctions on President N. Maduro, placing him on the same level as the Libyan leader B. Assad.

However, the American establishment said that the option of imposing an oil embargo remains in its field of vision, and the implementation of this measure of influence will depend entirely on the outcome of the Venezuelan referendum. We believe that the current political and economic environment of Venezuela in the medium term may significantly deteriorate, which will be reflected in decline in oil production in the country, and as a result, will have a positive impact on the process of liquidating the canopy of supply in the oil market.

Also on the side of oil shortly, most likely, will remain statistics of American oil production. According to the latest drilling activity data, the number of new towers commissioned was only two units. As a result, the average levels of weekly growth in drilling activity in June - July decreased to the mark of 2 - 7 pcs. From the levels of the first six months of 2017 in 10 - 20 pcs. The current dynamics of growth in oil production in the US in a compartment with a noticeable slowdown in drilling activity allows us to expect some easing of pressure on the oil market from the US supply of energy in the prospect of August-September. As a result, we expect that by the end of the week the oil will keep upward dynamics in the range of 52 - 53.5 $.

The potential for a more impressive price increase is limited by the dynamics of the cartel's oil production, which, according to preliminary estimates, in July will violate the cumulative production quota of 32.5 million barrels. / Day in an even larger volume (according to our estimates, OPEC production by the end of July could reach 32.8-33 million barrels per day). We believe that the market will be able to get more clarity on the actions of the cartel after the meeting of OPEC + ministers in Abu Dhabi on August 7-8, the agenda of which will be to clarify the reasons why large countries participating in the transaction are deviating from their obligations to meet production cuts.

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