Oil prices continued to decline on Thursday, a barrel of WTI, the US benchmark, even falling below $ 50, its lowest level since the start of the year. Explanations.
The barrel of oil has therefore not rebounded. While on Wednesday prices lost nearly three dollars to finish at their lowest level since December, they fell below the symbolic bar of 50 dollars on Thursday, March 9. At 5 pm, the price of “light sweet crude” (WTI), the American benchmark for crude, lost $ 1.31 to $ 48.97, its lowest level since the start of the year. Main argument cited to explain this sudden decline: the Department of Energy (DoE) on Wednesday announced a jump in US stocks of crude, while they had already chained records for several weeks. Clearly, several investors, because of the recovered health of American shale producers, are starting to liquidate their “bullish” positions. “Open positions speculating upward on WTI are at an all-time high, so when there is a correction, it is amplified by the size of this position,” adds Benjamin Louvet, Commodities Manager at OFI AM.
Since the meeting in Vienna on November 30, which saw OPEC member countries and those outside OPEC, such as Russia, reach a historic agreement, the price of black gold had recovered. The thirteen cartel members had agreed to reduce their production by 1.2 million barrels per day from 1is January to June 30, 2017. A decision – generally respected so far – which reassured the markets and raised the price of a barrel. However, the restart at the start of the year of shale hydrocarbon projects in the United States and the revised upward budgets of certain oil and gas giants such as the American ExxonMobil, make the markets more and more perplexed as to a lasting stabilization of oil prices. price above $ 55. The DoE announcement on Wednesday, which revealed that U.S. commercial crude reserves rose 8.2 million barrels to 528.4 million barrels, acted as a catalyst.
According to Benjamin Louvet, the drop in the barrel of oil could also have another explanation. “I think the market wants to test the will of OPEC and Saudi Arabia,” he says. The statements are confused, suddenly we indicate that we will not renew the Vienna Agreement, suddenly we say maybe. It’s not very clear, although I have a feeling the cartel and Riyadh know where they are going. And this renewed short-term volatility could fix them by instilling doubt among American investors: the more volatile the prices, the more risky it is to invest in shale oil ”. Unlike the Saudis whose barrel is profitable from 10 dollars, the producers of American “shale”, only recover when the barrel exceeds 55-60 dollars according to the experts. But the bearish strategy that Riyadh has long defended has lived. The Wahhabi kingdom has been strongly affected by the plunge in prices – from more than 100 dollars at the end of 2014 to 50 dollars today – and today posts a budget deficit close to 87 billion dollars or 14% of the GDP. Riyadh therefore no longer intends to risk seeing the barrel plunge. “In the end, we can still lose 4 or 5%, but beyond that, I think that Saudi Arabia and OPEC will intervene in one way or another” concludes Benjamin Louvet.