On April 20, due to reduced demand for hydrocarbons because of the restrictive measures against the coronavirus, May futures for WTI crude oil fell from $ 18 per barrel to negative values.
During the bidding, the cost reached minus $ 40.32 per barrel - this is an absolute historical minimum. According to Energy Minister Alexander Novak, there is no reason to dramatize the situation, because the market is in an extremely volatile state. At the same time, the Russian Urals was sold at $ 7.5 on the morning of April 21 - and this is the level at which default was declared in 1998. Note that the head of Sberbank German Gref said that there would be no crisis in the country even at zero price for “black gold”.
Meanwhile, Texas authorities, the homeland of WTI oil, again refused to impose production restrictions. Over the past three weeks, they held two meetings at which quotas for oil workers were discussed. However, no decisions were made. Unless a working group was created to monitor the situation.
Note that in Texas alone today more oil is produced than in every OPEC country, except for Saudi Arabia.
OPEC participants also held an emergency meeting on Tuesday, discussing the possibility of an additional reduction in oil production - this measure becomes necessary in view of the rapidly expiring place in oil storage facilities. The OPEC + meeting is tentatively scheduled for May 10, but time is running out.
“The market is shouting that it is not necessary to reduce production tomorrow or in a week, but now,” said Monika Malik, chief economist at Abu Dhabi Commercial Bank.
According to Anna Bodrova, senior analyst at IAC Alpari, “cheap raw materials are very bad news for the ruble.” Commodity exports bring Russia about 80% of foreign exchange earnings, and hydrocarbon exports - about two-thirds.
“The Russian budget deficit will only widen, and the easiest way is to“ cover ”it with the devaluation of the ruble,” concludes Nordea economist Tatyana Evdokimova, noting that by the end of 2020 the economy may not be able to count $ 165 billion in raw materials.