The oil price came back to around 68 dollars a barrel after falling
On Wednesday, Brent crude managed to go on 2-week lows in the area of 66.67 and return back beyond the level 68. Trading in commodities remains volatile, and the players – are prone to emotion with an eye on the General mood in the world. Large local drawdown was a sign of solidarity with risky assets, “came under fire” in terms of heightened trade relations between Washington and Beijing.
So, quotes reduced for the second consecutive week, falling under the influence of General market sentiment. However, in the raw materials segment is not so smooth. Yeah, exporters, OPEC periodically remind the market about its willingness to long-term cooperation and maintaining stability in the market. But the reality is that Iraq has planned to increase production capacity, Saudi Arabia went on dumping in Asia and Russia increased the volumes of oil production.
And, of course, the shale companies in the U.S. continue to set records for production of hydrocarbons. According to the energy Ministry, last week, production rose by 0.26%, exports hit a new record at the level of 2.18 million barrels per day, reserves in Cushing jumped the most since Dec 2016, 3.6 million barrels. Of the positive aspects of the report: crude oil inventories fell by 4.6 million barrels, the most in three months, and gasoline stocks down 1.1 million barrels. Overall, the report was rather bearish, but the market decided to take advantage of the retreat of the panic on world markets and joined the recovery in risky assets.
It is not excluded that after Brent bought on the lows, the recovery of prices in the short term will be developed. However, this requires one condition: the preservation of the interest risk. So, when any negative news on trade between the US and China, the players can start again to get rid of the oil. So chances of sustainable recovery are low, but this does not mean that Brent may test the mark 69 in the near future.
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