Oil

 

In the review of August 24, at a time when the price of oil came close to the support line near the mark of $ 47 per barrel, it was suggested that if the price breaks through the support line, it will continue to move downward. And so, it happened, however, this movement was interrupted once again by the dollar index, which was rushing downwards, and yesterday, the prices of WTI-grade oil undertook a re-test of the bottom line below.

 

 

Despite the upcoming season of hurricanes, the price of oil continues to trend sideways, tending towards a decline. As a rule, oil prices tend to rise during hurricanes, however, in today's situation, the market is more likely to lower the prices than to increase them.

In such situations it is necessary to present a global picture of the oil market and to recall how events have developed in the past.

After oil rushed from it's high levels to around 35 $ per barrel, many analysts predicted the ruin of oil shale companies in the US and, as a result of these events, a recovery in prices.

Events have indeed developed in this vein. Many companies went bankrupt, but those who managed to stay significantly reduced their cost of production and, moreover, began to increase the production of shale oil. Currently, the United States is the world leader in the oil shale industry. 2/3 of all oil is extracted in the US from shale sources, and the extracted volumes are more than 6 million barrels per day. The conclusion is this: random players have left, the strong ones have stayed and continue to increase production volumes, steadily reducing the cost price.

On the one hand, in 2017, oil reserves are falling at a significant pace, on the other hand, oil reserves are still high by historical standards.

If oil prices drops below $ 45 for a barrell of WTI, OPEC will have to intervene, and, as always happens in similar situations, to convene for an unscheduled meeting, where at the very least they will have to conduct verbal intervention.

Most likely, other things being equal, in the coming months, the global oil price market will not change in the oil market. The most likely scenarios are that the price on the WTI brand Oil will remain in the $ 43 to $ 50 per barrel price corridor. When approaching the lower boundary, it is advisable to buy, and respectively, when prices close to the 50 mark are reached - sell.

 

 

Care: These reviews are a private opinion of ARUM CAPITAL and are provided for information only. In no way can the provided analysis be considered as an action signal, neither is it any sort of investment advice (for the purposes of EU Directive 2004/39/EC). ARUM CAPITAL waives any liability for the trading results which may arise after using these reviews. These materials contain NO warranties or guarantees, either direct or implicit, on the precise, complete or confirmed character of the details they contain.

 

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