The price of oil began to decline this morning, despite its rapid and steady growth yesterday.
This morning, the price of Brent crude futures for delivery in August on a trading floor in London fell by 0.65% or 0.28 dollars. Its current level is 42.80 dollars per barrel. Recall that yesterday the auction ended extremely well with an increase of 2.11% or 0.89 dollars.
The price of WTI light crude oil futures for August delivery in electronic trading in New York also fell, which was already quite substantial in the morning. Oil dropped by 0.96% or 0.39 dollars, which sent it to the level of 40.34 dollars per barrel. It ended yesterday's trading with an increase of 2.3% or 0.9 dollars. Whereas for this day, it began to rapidly lose its gained advantage.
The main factor for the sharp losses in the black gold market was the extremely unexpected appearance of Peter Navarro, a trading adviser in Washington. The day before, he spoke out about the fact that the President of the United States of America would soon refuse a trade deal with China. The reason for such a sharp cessation of trade between countries should be sought in American investigations into the source of coronavirus infection. According to the latest US intelligence, the virus originated in the territory of one of the laboratories in Wuhan. Therefore, the US authorities consider China to be fully responsible for the spread of the COVID-19 virus infection, for which it must be punished.
However, Trump himself denied breaking the trade relationship between the US and China, expressing the hope that this relationship would last quite a while. Nevertheless, investors were gravely anxious by the rumors that sprung, which affected the cost of oil quotes.
Market participants also continue to care about the situation with an increase in the incidence of coronavirus infection in the world. From day to day, an increasing number of infected are recorded, which provokes the thought of a possible second wave of the pandemic.
Meanwhile, the basic fundamental criteria in the oil market remain quite favorable, which suggests that in the long term, the price of black gold will continue to grow and the current decline may be a respite before the next significant leap.
Good support to the market is provided by news about a decrease in the supply of raw materials. In addition, the total number of drilling stations in the United States of America also continues to decline, despite the fact that their number has already reached a minimum level.
WTI crude oil has particularly strengthened in recent weeks. Even today's decline could not move it above $ 40 per barrel, which in itself is a sign of stability.
The global economy continues to grow, although at a slow pace, but is followed by an increase in demand for raw materials, which, in turn, perfectly supports oil.
Positive economic data allowed experts from the Bank of America Global Research to revise their forecast for the cost of crude oil for the present year and the ones to follow. According to their new data, Brent crude oil will be consolidated this year around $ 43.70 per barrel. Recall that before this, the average cost was forecasted at $ 37 per barrel. In the next two years, its price may rise to around 50 and even 55 dollars per barrel. The cost of WTI crude oil this year will be located in close proximity to the mark of $ 40 per barrel. According to analysts, it will be $ 39.70 per barrel. Previous forecasts reflected the level of 32 dollars per barrel. Long-term forecasts for the next two years show growth to $ 47 and $ 59 per barrel.
The current decline in the oil market is nothing but a necessary correction, without which further growth is impossible. Moreover, market participants in the future will not be very worried about the epidemiological situation in the world and other negative factors. They will focus on the output of the next portion of statistics on black gold reserves in the United States of America. If the data are positive, growth in the oil market will inevitably recover.
