Today, the price of crude oil has rapidly crawled down. There are a lot of negative reasons for this turn of events, but the increase in the number of COVID-19 infections, which unexpectedly began to be recorded in the United States and China, is particularly pressing on black gold. This hints to investors about a possible second wave of the pandemic, which could be quite real, which means that the second wave of the crisis is also not far off.
This morning, the price of Brent futures for August delivery on a trading floor in London was already 2.79% or 1.08 dollars and lower. This sent the raw materials to trade at the level of 37.65 dollars per barrel. Recall that Friday's trading ended with an increase in the value of 0.5% or 0.18 dollars, which fixed the price at 38.73 dollars per barrel.
The price of WTI light oil futures for July delivery on the New York Stock Exchange in New York also fell. The fall was rapid and tangible and amounted to 3.97%, or 1.44 dollars, which made futures move to the mark of 34.82 dollars per barrel. Friday's trading also ended with a reduction, but it was not as significant as it is today. The decrease was recorded at -0.2% or 0.08 dollars, thus, the price was at around 36.26 dollars per barrel. However, this has already become the minimum value over the past few weeks at the close of trading, and today, apparently, this record will be broken again.
In general, over the past working week, the cost of Brent crude oil fell by 8.4%. The price of WTI crude oil fell by about the same amount. This means that for the first time in almost two months, black gold has demonstrated a drop in its value in the total weekly rate.
The greatest concern among market participants now is the situation with the continuation of the COVID-19 pandemic. Nobody wants a repeat of the events of the spring of this year, but right now there is a special danger that a new wave of infections will sweep the world. At least, investors have steadily fixed their eyes on statistics on the number of infected in the US, China and the world, as in recent days this figure has begun to grow.
For example, an outbreak in China may indicate the second wave of coronavirus infection, where in eleven neighborhoods in Beijing the authorities decided to return a special regime again, which was dictated by a sharp increase in the number of infected people. According to the latest data, China has yet again detected the virus amongst 67 people, which cannot but cause alarm.
Amid a possible new wave of the pandemic, news from OPEC turned out to be almost unnoticed. Recall that the participating countries decided to extend the agreement to reduce the extraction of raw materials for at least another month. Meanwhile, many analysts doubt that all members of the organization will be able to fulfill their obligations under the contract. Last time, they were not able to reduce their production to the level determined by the contract for Iraq and Nigeria.
Pressure on the oil market was also felt by statistics coming from the United States of America. So, at the end of last week, it became clear that the reserves of black gold in America increased by 5.7 million barrels, which was a complete surprise for experts. Recall that according to preliminary forecasts of analysts, the opposite situation should have happened - a reduction in reserves of not less than 3.2 million barrels. This negative added news that the demand for raw materials and fuel remained almost unchanged, while it is below the usual level by about 15-20%. There is no growth prospect for this indicator yet: a new wave of coronavirus infection only restricts the consumption of petroleum products more strongly, since quarantine measures are returning.
According to incoming statistics on the oil market, the level of open interest in oil futures last week fell by more than 20 thousand contracts. The total trading volumes for them also showed a decline, which turned out to be in the region of 315.5 thousand contracts. Such an outflow of interest can seriously affect the cost of crude oil. Sellers took the initiative in the market, and therefore, we can expect further drawdown of black gold quotes of both brands.
