Oil Recovery will be difficult
After a few sessions of recovery, Brent crude moved sharply lower and have fallen yesterday more than 3%, reaching the lows of mid-July at around 71,67. To close the quotes came back above the level 72, but was left with a large intraday losses.
The catalyst for the strong sales was the news from China, which announced its intention to introduce a 25% duty on the export of American oil. These messages are more affected WTI, which is understandable, but got a good hiding and the entire energy market, which frightened the change of supply chains and patterns of global demand. Additionally, the situation between the US and China presses on the market of “black gold” as the cause of the flight from risk amid further escalation of a trade war.
Meanwhile, another disappointment comes from the United States, where, according to the energy Ministry, last week crude oil inventories dropped by 1.3 million barrels against forecasts for a drop of 3.3 million and estimates-level API -6 million in addition, stocks of gasoline and distillers grew by 2.9 and 1.2 million respectively. The film has mitigated the production decline by 0.9% to 10.8 million barrels per day.
The main negative from China have already played. But it is only the emotions that usually accompanied a deep drawdown in prices and the subsequent rebound. Now the main task of Brent – recovery, which is unlikely to be easy and painless, given the appearance on the market of new fears, especially the worsening trade feud between the two largest economies in the world obviously does not work for the benefit of the oil market, as all trading venues.
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