Oil in the short term may fall even lower

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Fluctuations in the price of oil is fascinating. The raw material is very volatile and sensitive to changes in market sentiment though, because the main part of the marketable contracts non-deliverable. It is ideal for speculators tool. But in addition globally from the cost of black gold depends very much: the state of the national budgets of individual countries to financial constituent companies, their agents, staff and related markets.
The oil market, like any other, is now very concerned not so much the balance of demand and supply of black gold in the world how much the trade war between the US and China. Instead to be finally at the table of negotiations, parties implement the increase in import duties against each other. This forced the investors to shy away from assets associated with risk, just in case. The theme of trade wars long-term, and it is closely watched.
There is, incidentally, the expectation that China’s GDP in 2020 would reduce the growth rate and show less than 6% increase, and by the end of next year and all will roll down to 5.7-5.8 percent annual expansion. This is bad news for the oil market? Yes, just horrible, because China remains the largest importer of oil in the world with the purchase of 2018 order 461,9 million tons of raw materials. It’s about more than 9 million barrels a day, that is, the figure itself is colossal. If Beijing reduced growth rate of the economy, it is logical to assume that the raw materials he needs will be less due to the low demand from industries. Global demand for black gold and it looks like not much, but with the decline of the Chinese economy in General go into a depressed area.
There are also indicators of oil reserves in USA (seasonal variations do not count, the inventory is, and they are wide), and the parameters of U.S. commodity production (all very nice), and the eternal clashes of States with middle Eastern States in order to bite off a new chunk of the market. It also must be considered, as commodity supply increases, and this is not good for growth opportunities rates.
Short-term, the Brent crude more likely to decline than to growth. In that case, if the oil breaks through $58, new bearish target will be the line of $57,50 underneath – $56,00. Medium-term is quite stable and implies a “sideways” $55-62. A long-term perspective rather minor, with a potential reduction in the area of $50.
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Anna Bodrova,
Senior analyst,
“Information-analytical center “Alpari”