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Oil Surge and IPCA – Investment Analysis

Written by Paulo Nogueira
Published on 02/04/2020 at 20:09
Petróleo IPCA Investimentos
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“After Donald Trump tweeted that he expects to see a reduction of 10 million barrels, the price of oil rose over 20%.” Some considerations must be made. It is evident that the information provided by the U.S. president should not be questioned, but it is worth pointing out some inaccuracies that hinder understanding. Will the reduction be of 10 million barrels per day? If so, who will do it? For Saudi Arabia is taking about 12 million BPD, while Russia extracts about 11 million BPD. Each country would have to cut its production to nearly half for the math to add up, which seems difficult. If the mentioned cut involves the total OPEC+ production, should we interpret it as a return to full harmony of the group?

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The answers are essential for us to quantify how much the price should rise. We had already been emphasizing the fragile balance in which the price of oil was situated, especially given that it has a cartelized market.

In any case, previous calculations regarding the discrepancy of domestic oil prices compared to the international market have fallen apart. The international price that was 20% below that practiced by Petrobras, validating a cut of similar magnitude, has reversed, now being practically equal to the domestic price.

We emphasize that the rise in the oil market observed today does not affect our projection for the 2020 IPCA of 1.8%, as we had already accounted for a reversal of commodity prices in our scenario. The only thing that changes, thus, is the potential of -50 points for the IPCA headline in 2020 not being a risk factor anymore.”

Courtesy and News Suggestion by Ativa Investimentos

Paulo Nogueira

Eletrotécnica formado em umas das instituições de ensino técnico do país, o Instituto Federal Fluminense - IFF ( Antigo CEFET), atuei diversos anos na áreas de petróleo e gás offshore, energia e construção. Hoje com mais de 8 mil publicações em revistas e blogs online sobre o setor de energia, o foco é prover informações em tempo real do mercado de empregabilidade do Brasil, macro e micro economia e empreendedorismo. Para dúvidas, sugestões e correções, entre em contato no e-mail informe@en.clickpetroleoegas.com.br. Vale lembrar que não aceitamos currículos neste contato.

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