Positive sentiment prevailed on the crude oil market late last week due to the easing of the Corona restrictions in China, which coincided with the G7 agreement to implement a price cap mechanism for the sale of crude oil. Russia, which led to the closing of crude oil prices at the highest level since last August, to reach the third consecutive weekly gain.
Against this backdrop, the international “Reg Zone” report confirmed that crude oil prices received strong support at the end of the week as trading closed at its highest level since last August and markets rebounded mainly thanks to support from the easing of the Corona Virus restrictions in China and also made weekly gains for the third consecutive time.
The report promised that the easing of the so-called “zero Covid” policy paves the way for an increase in demand for crude oil, noting that what increases volatility is the state of tension between tight supply expectations and concerns about a slowdown in oil supply. global economy.
He noted that the possibility of renewed demand from China is pushing futures contracts to levels not seen since last August, while the new European sanctions on Russian oil, which will take effect next December, also indicate a rise in crude oil prices.
The report says there are many geopolitical risks at play, as this would keep oil’s path to the upside, and if the dollar continues to fall, the strength of oil prices could be relentless, pointing out that China’s zero Covid strategy is negatively affected the country’s economy and the oil market is expected to decrease oil demand by 400,000 barrels per day in 2022 due to virus restrictions, according to analysts from China International Bank Ltd.
Furthermore, the international “Opel Price” report indicated that crude oil prices were heavily influenced by continuing fears that markets are still tense with the G7 agreement on the mechanism to fix Russian crude oil prices, which has pushed to further price increases.
The report indicated that U.S. Strategic Petroleum Reserve issues were nearing an end and during the Strategic Petroleum Reserve’s issuance period, which ran from April to the present, approximately 180 million barrels and commercial stocks were released. of crude oil have increased between 20 and 30 million barrels, and with the end of the release process. About the reserves The market fears a significant decline in US oil stocks in the next period.
He said the drop in the dollar supports oil prices, and this coincides with the entry into force of sanctions by the United States and its allies in the Group of Seven on Russian oil on December 5, as it is expected that to a large extent that Russian oil exports will shrink, considering that sanctions on Russian crude and an end to reserve emissions The strategic decline of the dollar and the instability of US oil production provide a perfect storm for rising oil prices.
In the same context, the “Oil Price” report highlighted the statements of Haitham Al-Ghais, secretary general of the OPEC Organization, in which he stated that the crude oil industry needs to increase investment in production capacity and new production so that the oil market can avoid significant fluctuations in the future, underlining the importance of increasing investment in the oil sector.
He stressed the importance of the secretary general of “OPEC” clarifying that the sharp decline in investments in the oil sector began with the collapse of prices in 2015 and then again in 2020 with the first wave of the Covid epidemic, which exacerbated the volatility of the oil market.
The report promised that global spare capacity is currently very low and is concentrated in Saudi Arabia and the UAE, noting that the current energy crisis after the Russo-Ukrainian war will take years in light of weak investment in oil and gas.
The report stressed that the recently released “OPEC” report on global oil prospects indicates that all forms of energy are needed to meet future energy needs and that oil is expected to hold the largest share in the energy mix until 2045. which accounted for 29 percent. Almost at that moment.
The report highlighted OPEC’s expectations, which also show that the global oil sector will need cumulative investments of $ 12.1 trillion in exploration, production and distribution until 2045, equivalent to more than $ 500 billion annually. .
As for weekend prices, oil prices increased over the weekend, by more than 4 percent, with the dollar falling and the imminent entry into force of a ban by the European Union. of Russian oil, as investors wait for China to relax restrictions to fight Covid. Although fears of a global recession limited gains, Brent crude oil futures rose $ 3.81, or 4.02 percent, to $ 98.48 a barrel. The contract recorded a weekly increase of more than 3 percent, according to “Reuters”.
On the other hand, the total number of active rigs in the United States increased by 2 this week, with the total rigs increasing to 770 this week – 220 rigs more than rigs this time in 2021 and 305 fewer rigs. compared to plants in early 2019 before the pandemic.
The report by the American company Baker Hughes, for drilling activities, says that the oil rigs in the United States increased by 3 this week to 613 and the gas rigs fell from 1 to 155. The various platforms remained unchanged at 2 The report indicated that the number of rigs in the Permian Basin remained constant once, another this week at 346. Eagle Ford rigs also remained unchanged at 70.
The report found that U.S. crude oil production declined in the week ending October 28, to 11.9 million barrels per day, according to the Energy Information Administration’s latest weekly estimates, and U.S. production levels are increased by just 200,000 barrels a day so far this year, and 400,000 barrels a day, just barrels a day from last year.
