Oil price could not resist the global negative and fell by 2.5%
At the end of trading on Tuesday quotes of Brent crude dipped 2.5% on a combination of internal factors and negative external background, which is characterized by the evasion of risks in anticipation of the key events of the week, including trade negotiations between the US and China. The barrel fell under the $ 60 mark for the first time in nearly two weeks on Tuesday morning trying to defend this psychological level, but so far in vain.
Interestingly, the geopolitical factor is not able to push the price to increase. Washington imposed sanctions against Venezuela, which is only partly constrained further declines and did not cause significant reaction of the market participants. First, the market started to price this in last week, when trump announced the imposition of sanctions. Second, production in Venezuela and the already low because of the deep crisis, and even complete withdrawal this exporter from the market will not lead to shortage of supply because of its abundance, especially in the backdrop of record production in the United States. Moreover, countries in the Middle East can easily compensate for lost supplies from Venezuela, which is openly stated by the American Finance Minister Mnuchin.
Moreover, the focus on commodities is now focused on the General situation on the financial markets. Here again not all is smooth. The flight from risk intensified. Beijing has demanded that Washington to refuse a request for extradition of the CFO of Huawei. Investors fear that this story may negatively affect upcoming trade talks between the two countries.
Tonight the API will publish the latest statistics on stocks of crude oil, which, according to forecasts, will reflect the regular growth rate, although on a more modest scale than the previous week. In this case, if the interest is to risk not coming back, the market will not be able to play “the Venezuelan factor,” which, however, still will be felt in the future.
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