Oil market participants' opportunism is soon to be revealed as the market is rather transparent

31 july 2017 | Rossiyskaya Gazeta

Crude oil prices are rebounding thanks to the OPEC and the United States, says Rossiyskaya Gazeta. OPEC member countries are beginning to voluntarily reduce exports. Against the backdrop of a decline in commercial oil reserves and a slowdown in the US drilling activity, the exchange was cheered up by the OPEC's verbal interventions: oil quotations went up to the maximum of two months. Theoretically, if Russia declares its decision to join the OPEC members' initiative, it can raise prices even higher and lose nothing: Russia follows the export quota by default.

Alexander Kurdin
Alexander Kurdin
Department for Fuel and Energy Sector

"I would not try deceiving the market participants," said Analytical Center expert Alexander Kurdin in his interview for Rossiyskaya Gazeta. He believes that such initiatives follow some analysis. Besides, as the oil market is rather transparent, the opportunism strategy of its participants is soon to be revealed. Mr. Kurdin assumes that this may be an attempt to test the market's ability to perceive such initiatives in advance.

According to the expert, there is no point in forecasting the fluctuation of oil quotations using verbal interventions alone, since words may well be compensated or, conversely, reinforced by the same words about the monetary or fiscal policies of the largest oil importers or information on the reserves, production and drilling activities of major producers, primarily these of the USA.

Russia will benefit by joining the initiative, but only when most producers get involved, Kurdin believes. "Then profits from a price increase will be higher than costs caused by decreased production," he said.

Source: Rossiyskaya Gazeta