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26.02.2015 16:40

Oil: а review of the market situation

Prices of oil futures declined markedly, falling at the same time below $ 61 (Brent) and $ 50 (WTI), which is associated with the strengthening dollar and worries over the level of oil reserves.

The dollar strengthened its position against a basket of major world currencies as investors assess data on US unemployment, inflation, and orders for durable goods. Recall oil prices usually fall when the US currency strengthened as the dollar-denominated commodities become more expensive for buyers in other currencies.

Market participants also continue to analyze yesterday's report on oil reserves. Recall, in the week of February 14-20 oil reserves rose by 8.4 million barrels (434.1 million barrels before), while the expected increase of 4.7 million barrels. Now stocks are at historical highs from August 1982. Oil reserves in Cushing terminal rose by 2.4 million barrels - up to 48.7 million barrels. Gasoline inventories fell by 3.1 million barrels - up to 240 million barrels. Analysts had expected a decline of 1.1 million barrels. Distillate stocks fell by 2.7 million barrels (up to 124.7 million barrels), while analysts had expected a decline of 3.3 million barrels. Utilization rate of refining capacity decreased by 1.3% to 87.4%. Analysts expected a decline of 0.5%.

"The United States can not get rid of excess oil, which translates into growth stocks and growth of the discount to Brent, - the analyst said Saxo Bank Ole Hansen. - This situation suits the OPEC countries that peg their prices to Brent".

Meanwhile, today the head of the Commodity Research Bank of America Francisco Blanch said that Brent oil and WTI in the coming weeks may go down in value to $ 30 a barrel as oil tanks are overflowing, said, "We expect a very rapid replenishment of stocks in the next few weeks "- he said, noting that the daily excess of supply over demand of oil it is about 1.4 million barrels per day.

Blanche said that if in the storage tanks over the place, prices react to it more rapidly to balance supply and demand. According to him, "this is what we expect in the coming weeks." We also recall in mid-January, Bank of America Merrill Lynch predicted a fall in prices for Brent crude to 31 dollars per barrel, WTI - up to $ 32 by the end of the first quarter of 2015.

Little support for the market to continue to provide yesterday's statement to Saudi Oil Minister Ali al-Nuaimi an increase in demand for oil in the world. He also noted that the oil market all the "easy". Saudi minister comments are very similar to the report of the Organization of Petroleum Exporting Countries, published in February.

March futures price for US light crude oil WTI (Light Sweet Crude Oil) dropped to 49.33 dollars per barrel on the New York Mercantile Exchange.

April futures price for North Sea Brent crude oil mix fell $ 0.91 to $ 60.94 a barrel on the London Stock Exchange ICE Futures Europe.

Market Focus

  • The Bank of Japan decided by a 7-2 majority vote to hold the interest rate at -0.10%
  • Earnings Season in U.S.: Major Reports of the Week
  • U.S. commercial crude oil inventories decreased by 4.7 million barrels from the previous week
  • Australian unemployment rate stable at 5.6% in June
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