Page 10 - ITATUBE Journal 1 2020
P. 10

Market information
  Figure 1: Markets of Steel Tube and Pipes Source: ITATube Journal/Wirtschaftsvereinigung Stahlrohr
a world oil consumption decrease of more than 30% (from about 100 Mio. barrel/day to only 70 Mio. barrel/day). A tremendous over- supply of oil occurred reflected in a crude oil price collapse of about 60% (64 US$/Barrel to 25 US$/ barrel in only 5 weeks). The OPEC lead by Saudi Arabia, and major non-OPEC oil producing countries tried to find international agree- ments to reduce the daily oil pro- duction. But due to the significant implications of such measures to some countries first attempts for an agreement failed. Subsequent internal conflicts between the oil producing countries even put further pressure on the oil price level. Only on April 20th the oil producing countries could agree to reduce the world daily production by about 10 Mio. barrel/day for the months May and June 2020. This announcement to reduce the daily production anyhow did not show the desired consequences, since even this reduced produc- tion level is by far higher than the present world oil demand caused by industrial lock down due the corona pandemic. The International Energy Agency (IEA) expects, if the industry restarts within May 2020, an overall oil consumption reduction for 2020 of about 9 Mio. barrel/day for the entire year. This may be opti- mistic, anyhow the agreement of 20th of April by far does not out- balance the reduced demand for crude oil in the present months March and April. Therefore, the crude oil price continued its free fall to 18 US$/barrel as of 19th of April. Unless the world oil demand will raise again or the oil produc- ing countries can agree on further significant reductions on the oil production, the oil price will prob- ably remain on such low level.
 gas rigs itself is heavily depending on the oil price (Figure 2).
The oil price chart of North Sea Brent Oil (Figure 3) shows, after a long period of raising oil prices from early 2016 (41 US$/barrel) to October 2018 (85 US$/barrel), the crude oil price fell down to 53 US$/barrel in only 2 months, to recover to about 72 US$/barrel until April 2019. Since April 2019 to January 2020 the oil price fluc- tuated between 60 US$/barrel to 68 US$/barrel. These develop-
ments were mainly determined by political interventions e.g. in form of imposing trade embargos on oil producing countries like Iran and Venezuela to balance demand and offerings of oil. End of January 2020, the first corona infections were reported from Wuhan/China, and the Chinese government took first countermeasures and shut down parts of social life and their industry. Other countries followed with such measures afterwards. These measures were prompted by
Figure 2: Correlation of Oil and Gas Rigs versus Oil Price Source: based on Baker Huges and Nasdaq
 ITAtube Journal No1/July 2020
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