There was a rise in the price of crude oil on Friday, and black gold may be in positive territory for the second week in a row. Investors are beginning to believe in a faster recovery in fuel demand which positively affected the market, disregarding the still growing cases of COVID-19 patients around the globe.
Futures contracts for Brent crude oil for delivery in October rose 0.42% and moved to the level of $ 45.15 per barrel. Its value may also increase by 1.6% in a week, which, of course, is a very good result, especially in the conditions of uncertainty that reigns in the markets.
Futures contracts for WTI crude oil were also in positive territory jumping 0.4% which allowed it to reach $42.41 per barrel. During the current week, the price may grow significantly by 3%.
However, the rise in the price of both oil brands (close to their maximum values) does not mean at all that further rapid growth is possible. At present, there is a situation where raw materials do not have enough impulses to continue their rally and reach even higher values.
Nonetheless, oil received some good support after news from the United States Energy Information Administration that stocks of raw materials, fuels, and distillates in the country decreased over the week - that is until August 7.
At the same time, on Thursday, the International Energy Agency revised its forecast for the level of demand for crude oil this year downward. One of the analysts' arguments was the drop in the number of air travel amid restrictive quarantine measures associated with the COVID-19 pandemic. Overall, the global decline in 2020 was 8.1 million barrels per day.
The organization, which includes countries-exporters of crude oil, also supported the downward trend in demand and put forward its reduction targets. According to her calculations, this year's demand will decrease by 9.06 million barrels per day, which will move it to 90.63 million barrels per day.
Meanwhile, WTI crude oil is now in the region of 42–43 dollars per barrel, which is certainly a fairly high level for it. However, there is also a problem here, which is associated with the lack of sufficient dynamics against the background of general uncertainty and inconsistency of the external fundamental background.
Thus, the mark is between two large lights. It is positively affected by news of a reduction in the US stocks. But the negative is added by the downward trend in the demand. Breaking free from the influence of these two factors will be extremely difficult, and it will not happen soon. One can, of course, count on further dynamics of black gold, but only if additional pressure factors are connected. For example, growth will be boosted by the favorable outcome of trade talks between Washington and Beijing which is due tomorrow. If the countries fail to come to an agreement on the main issues, then the next week may begin with serious subsidence in the price of crude oil and its refusal. Nevertheless, the very expectation of a meeting can push investors to buy, which will allow WTI to reach its maximum local value of 43.5 dollars per barrel.
The establishment of diplomatic relations in another region of the world, on the contrary, will push the price of oil to decrease. Thus, the resolution of the conflict between Israel and the UAE, as well as the establishment of official ties, indicate that the risks of oil supplies to this part of the world are almost leveled, which can potentially adjust the price downward.