Oil prices continued on a downward trend this Friday with Brent trading at $ 28.21 and the American at $ 25.14.
These prices reflect the oversupply – despite the agreement between OPEC and Russia to reduce production – and the general outlook for the world economy at a time when the effects of multiple short-term stimulus plans remain unknown.
The evolution of the global economy in May and June will be decisive in determining whether the current trajectory of oil prices will persist or will tend to a correction.
An analysis by the International Energy Agency (EIEA) anticipates a historic drop in demand for oil throughout the current year, to the point of 2020 being the worst year ever in terms of sector performance.
Biggest drop since 1989
OPEC, for its part, forecasts a demand of just 20 million barrels of oil / day, or even less, for the second quarter of 2020, reads in the most recent report of the cartel.
Analysts say that since 1989, OPEC has never had such low production levels.
On Thursday, OPEC and Russia issued a joint statement reflecting the gravity of the situation for the oil industry.
Saudis and Russians say they will “continue to monitor the performance of the market” and say they are “prepared to take the necessary measures”.
Within the framework of the agreement between OPEC and Russia, Riyadh announced on Friday a cut of 8.5 million barrels / day from May 1.
China in recession
Despite the plans announced in Europe and the USA, the latest figures of China’s economic performance, portending a serious recession in this country, and the referred fall in world production (which can only be reversed in the long run) draw bleak prospects for the price of the oil barrel.
Regarding the Chinese economy, it should be noted that it has now experienced its first contraction since 1992, according to figures released.
The Gross Domestic Product (GDP) fell by 6.8% in the first quarter of 2020 compared to the same period in 2019. The reflection of such a picture will also have an effect at the international level, although it is not certain, at the same time. how the Chinese domestic market will react to domestic stimulus measures.
