The price of oil will soon return to 85 dollars per barrel

  • And
  • +A

In the world markets now there are interesting events: U.S. stock indexes fell yesterday by 2%, gold up 2%, demand for US Treasures and other defense assets, the volatility index is at the local highs. However, the acceleration of the decline yesterday did not happen, and this morning the global markets are trying to bounce back up, so about turning on the “risk off” too early. Much will depend on today’s reports JP Morgan, Wells Fargo and Citigroup. If they disappoint, the sell-off in markets can worsen.
Russians are concerned about, first of all, the dynamics of oil. In recent days, Brent is riding on a roller coaster: after a 6% decline in the Wednesday-Thursday morning she bounces up 1.2%. In the moment it drops to $80 per barrel, this level acted as support. From oil high correlation with the us stock indexes, both assets are sensitive to fears of a slowdown in the world economy, therefore this dynamics is understandable.
Yesterday is not in favor of oil played statistics from the Ministry of energy about the growth of the stocks in United States 6 million barrels for the week. Investors alarmed and published monthly report of OPEC, according to which the world demand falls short of projections, and the growth of production exceeds them. The decline in production in Iran and Libya, fully kompensiruet increased production in Saudi Arabia, Libya and countries that are not members of OPEC.
In our opinion, to expect from Brent a quick return to around $85 per barrel is not worth it. In the case of stabilizing the situation on the world markets, the oil can be in the outset $80 to 83. If the current decline of the American indexes grow into a full retracement support at $80 per barrel of Brent will not stand.
___________
Roman Tkachuk,
Senior analyst,
Alpari