Minister Alexander Novak said before it happens oil producing countries should avoid filling of oil storage facilities to the full and prevent a market collapse.
MOSCOW, April 26. /TASS/. Russia’s energy ministry expects that demand on the oil market will gradually restore in the second half of the year but before it happens oil producing countries should avoid filling of oil storage facilities to the full and prevent a market collapse, Minister Alexander Novak said on Sunday.
"The world has never seen a 20-30% drop in oil demand. When fluctuations amount to tens of percent it is abnormal. Most of experts agree that we are at the peak of demand drop and the market will revive in any case. We will have to live through this peak and try not to fill storage facilities because if they are full it will mean a situation of complete collapse. So, we should avoid it. Everyone expects that the economy will begin to revive in the second half of the year and demand will go up," he said in an interview with the Moscow. Kremlin. Putin program on the Rossiya-1 television channel.
The minister also commented on the situation when the price of May futures for WTI oil went into the negative zone on April 20. "I don’t think this situation should be taken too seriously as though all oil will now be cheap," he noted. "It is not trade in real oil, it is the so-called futures. They were on no interest for anyone at the moment that is why they were sold at a below cost price. It is a special situation and has nothing to do with the real oil market."
On April 20, the price of May futures for WTI oil went into the negative zone, to minus $37.6 per barrel, for the first time in history. It was preceded by a dramatic drop in oil demand of 29 million barrels a day, according to the International Energy Agency’s estimates. Moreover, oil storages worldwide are overfilled while the OPEC+ oil production cuts deal will come into effect from May. That is why traders do not take this factor into account in immediate oil contracts.
