Fuels can get cheaper, oil prices are already very low.

The sharp sell-off in the oil market will translate into the fuel market. In the perspective of several days, prices at stations can fall by 15-20 grosze. The question arises what to do next with oil. The price collapse may affect the decline in shale oil production in the US, where the average cost of production is $ 35-40. per barrel. But the crisis, and thus nervousness in the oil market, can still last.

We are now dealing with shallow psychological and speculative mechanisms that will swing the price of the raw material. They operate in a relatively short period of time, weeks or months. Not on a scale of years. We have to take into account the volatility of the market in the near future, the more that due to coronavirus we have disturbances on the demand side.

On Monday, oil prices dived by up to 30 percent. after OPEC disagreed with Russia regarding cuts in oil production. The cartel demanded cuts of 1.5 million barrels a day, but Russia did not agree. As a result, on Sunday, Saudi Arabia, one of the largest oil producers in the world, decided to significantly reduce the prices at which it will sell oil in April.

The Saudis have announced that they will increase production from the current 9.7 million barrels per day to over 10 million barrels. And the country’s production capacity reaches 12.5 million barrels a day. Unofficial information is also appearing in the media that Saudi Arabia may ultimately aim to make the most of its powers. All this to eliminate players with the highest production costs from the market. – It can have much more serious global repercussions than the US-China trade war because oil affects so many segments of the world economy.

At the opening on Monday, the raw material became cheaper to USD 36.3 per barrel. After the first hours of trading, it approached the $ 30 limit, but bounced back from this level. Currently, the price is around $ 36.