Oil prices rose to two-month highs last week, reflecting simultaneous recovery of demand and lower supply. Oil producer companies’ quotes are strengthening. In two months BP rose by 33% and Exxon Mobil by 42%.
Weekly data from the US gave an additional push to the quotes. In particular, levels of crude oil reserves have been falling for the past two weeks, without reaching the 2017 peak levels. This indicates restoration of balance in the oil market and promises further quotations strengthening.
However, according to analysts at international investment firm, EXANTE, whilst it’s true crude oil reserves are dwindling, the collapse of oil prices and the announcements of quarantine softening are prompting an increase in refinement levels. This led to increased reserves of gasoline and distillates.
So, the total amount of crude oil and petroleum products continues to grow. The US strategic oil reserve continues acquisition. India and China haven’t stopped purchasing oil and oil products for the reserves as well.
“Buying oil at low prices is not evidence of increased consumption. Oil producers will remain under pressure for a while and continue to limit supply.
Share prices of oil producing companies don’t keep up with general market recovery, remaining at the levels about 40% lower than last year’s peaks. One should note the general downward trend in oil giants’ quotes, which began in 2016-2017. This year’s events only accelerate it,” said the EXANTE analyst team.