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Oil prices collapse after OPEC Secretary General’s statement

Oil prices plummeted on Wednesday after the speech by OPEC Secretary General Mohamed Barkindo. At the beginning of the day, Brent quotes renewed 11-month highs, for the first time since February 2020 exceeding $ 57 per barrel. Brent futures dropped 2% in half an hour amid a speech by OPEC Secretary General Mohamed Barkindo, who noted the still high volume of “surplus” oil accumulated in world storage facilities, finanz writes. While the situation on the oil market is “cautiously optimistic,” Barkindo said, levels in commercial storage facilities remain “persistently high.” Their volume in OECD countries is 160 million barrels higher than the 5-year average, despite OPEC efforts to achieve a record-breaking coordinated supply cut. Since the beginning of the year, oil quotes have risen by 10% thanks to an unexpected and generous “gift” from Saudi Arabia, which has decided to voluntarily single-handedly cut production by another 1 million barrels per day. The Saudis are determined to create a deficit in the market, despite the second wave of the pandemic and lockdowns in Europe, according to Commerzbank. Thanks to the efforts of the Saudis and their allies, oil will rise to $ 65 per barrel by summer Brent, Goldman Sachs predicts. This level is close to the balancing point of the Saudi state budget, which is more than 80% dependent on oil revenues. According to the IMF, Riyadh needs oil at $ 67.5 a barrel to keep revenue from spending in 2021. The rally in commodity markets continues to be fueled by injections from central banks, which the Bank of America estimates pumped $ 10 trillion into the system over the past year. In 2021, the total balance of six key global central banks will grow by another $ 3 trillion, to 28 trillion, predicts BofA. Source: FXPro

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