Oil in a depressed phase
The Brent barrel (Brent) this week has cut its price by -1.05% versus -491% on a monthly basis, versus West Texas (LCrude). Crude oil prices rose 32 cents during the American afternoon session for Brent and 31 cents higher for West Texas Intermediate.
More subdued inflation, much weaker retail sales, coupled with lower-than-expected U.S. consumer prices in April, triggered a boost in financial market expectations of a September rate cut by the Federal Reserve, which could moderate dollar strength and make oil more affordable for holders of other currencies.
Prices have also been affected by the fact that the long-awaited reduction in U.S. crude oil inventories has brought some peace despite the fact that the Middle East conflict continues to reproduce and generate distribution problems. According to data from the Energy Information Administration (EIA), U.S. inventories of crude oil, gasoline and distillates fell, reflected in an increase in refining activity and fuel demand. Inventory figures fell to 2.5 million barrels to 457 million in the week to May 10, versus the 543,000 expected. There have also been possible signs of slowing US inflation and strengthening price-supported demand, as well as we say geopolitical risk in the Strait of Hormuz area remains elevated. In addition to the Russian-Ukrainian conflict that is generating a redistribution and increase in the cost per barrel to Europe.
The fact that the news is showing a shortage may simply be a rash of geopolitical risk and failed negotiations between OPEC (Organization of the Petroleum Exporting Countries) and Russia. Both Russia and Saudi Arabia have reduced their production volumes. One of the reasons is purely geopolitical but the more important reason is purely economic, the world economy remains weak and with it the demand for oil. The world's leading economy is on the borderline of a coma to go into recession, and although the second largest economy, China, is growing in GDP, it does not mean that it will have the same dynamism as before 2020. This depresses the outlook for demand and therefore the price.
Looking at the chart, it can be seen that the support zone of Brent barrel is located at $71.47 and the resistance to be overcome is located at $95.12. The constant fall in the price has been gradual, so we may continue to see a decline towards the long term support in the coming weeks if the geo-economic picture does not change much.
Ion Jauregui - Analista AT
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
More subdued inflation, much weaker retail sales, coupled with lower-than-expected U.S. consumer prices in April, triggered a boost in financial market expectations of a September rate cut by the Federal Reserve, which could moderate dollar strength and make oil more affordable for holders of other currencies.
Prices have also been affected by the fact that the long-awaited reduction in U.S. crude oil inventories has brought some peace despite the fact that the Middle East conflict continues to reproduce and generate distribution problems. According to data from the Energy Information Administration (EIA), U.S. inventories of crude oil, gasoline and distillates fell, reflected in an increase in refining activity and fuel demand. Inventory figures fell to 2.5 million barrels to 457 million in the week to May 10, versus the 543,000 expected. There have also been possible signs of slowing US inflation and strengthening price-supported demand, as well as we say geopolitical risk in the Strait of Hormuz area remains elevated. In addition to the Russian-Ukrainian conflict that is generating a redistribution and increase in the cost per barrel to Europe.
The fact that the news is showing a shortage may simply be a rash of geopolitical risk and failed negotiations between OPEC (Organization of the Petroleum Exporting Countries) and Russia. Both Russia and Saudi Arabia have reduced their production volumes. One of the reasons is purely geopolitical but the more important reason is purely economic, the world economy remains weak and with it the demand for oil. The world's leading economy is on the borderline of a coma to go into recession, and although the second largest economy, China, is growing in GDP, it does not mean that it will have the same dynamism as before 2020. This depresses the outlook for demand and therefore the price.
Looking at the chart, it can be seen that the support zone of Brent barrel is located at $71.47 and the resistance to be overcome is located at $95.12. The constant fall in the price has been gradual, so we may continue to see a decline towards the long term support in the coming weeks if the geo-economic picture does not change much.
Ion Jauregui - Analista AT
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.