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27.02.2015 16:41

Oil: A review of the market situation

The price of oil rose today, breaking the level of $ 61 (Brent) and $ 49 (WTI), which is associated with the expectations of the publication of data on the number of drilling rigs operating in the US. It is worth emphasizing, since early February Brent has risen by almost 16% - is the maximum rise for May 2009, when she jumped in price by 29%. The cost of this month WTI rose by only 1.8%. We also add that the difference in cost between Brent and WTI in the last days is at a maximum in January 2014, including due to significant fuel reserves in the United States. "Increasing the price gap in part reflects the fact that oil production in the US continues to grow steadily, despite the much lower prices in recent years, said an expert on the commodity market Fawad Razagzada - This has helped push crude oil inventories to new all-time highs, which more or less confirms that the market is still saturated. " Recall, US Energy Information Administration on Wednesday reported the oil reserves in the country last week rose by 8.43 million barrels and amounted to 434.1 million barrels.

Traders await the report Baker Hughes Inc. by the number of drilling rigs operating in the US, which will be presented in the 18:00 GMT. Recall, for the last week, their number decreased by 3.5% - to 1.31 thousand. In annual terms, the number of installations has decreased by 26%, or 461 unit. Analysts predict that the rate will decrease again. However, some experts say that the reduction plants will not have an instant impact on oil production in the United States.

Rising oil prices also helps the weakening dollar against foreign currencies and data on consumer confidence in the United States. As shown by the final results of the studies submitted by Thomson-Reuters and the Institute of Michigan, in February, US consumers are more pessimistic about the economy than last month. According to published data, in February, the final index of consumer sentiment fell to 95.4 points compared with the final reading for January at around 98.1 points. It should be noted, according to the average estimates, the index was down to 94.2.

Meanwhile, a poll conducted by Reuters, showed that the price of oil is likely to have found the bottom and may start to grow in the second half of 2015, since the fall in 2014 caused a decline in production. In the short term the price can be reduced by concerns about oversupply. However, oil prices will recover, and Brent reached a high of $ 59 in 2015 and $ 71.80 in 2016. According to experts, the price will be supported by a slowdown of growth in production by OPEC. Problems in the Middle East and North Africa, especially in Iraq, may also have oil support.

March futures price for US light crude oil WTI (Light Sweet Crude Oil) rose to 49.02 dollars per barrel on the New York Mercantile Exchange.

April futures price for North Sea petroleum mix of Brent increased by $ 1.09 to $ 61.62 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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