Crude oil prices continue to move down according to the trend set on Monday, but the decline has slowed significantly. The negative trend, according to analysts, will quickly come to naught, but so far this is hindered by clear signals that it is worth waiting for an increase in the supply of crude oil in the sector due to the influx of even larger volumes of shale oil produced in the United States of America.
The price of futures contracts for Brent crude oil for delivery in March on the trading floor in London sank 0.2% or $0.11, which moved the mark to $55.55 per barrel. Recall that by the end of Monday's trading session, contracts also sank in price by 0.6% or $0.33, to $55.66 per barrel.
The price of futures contracts for WTI light crude oil for delivery in February on the electronic trading platform in New York also lost 0.11% or $0.6, to $52.19 per barrel. At the close of trading on Monday, they consolidated in the green zone, rising by $0.01, to $52.25 per barrel. This value, among other things, is the maximum for the last eleven months. Moreover, it gives hope that the negative trend will not drag on.
The current level of crude oil prices is extremely beneficial for most American companies that are engaged in the production of shale oil. That is why they express active intentions to increase their own production and get additional profit from the sale. Of course, this will not be very positive news for the oil market as a whole, since the level of demand is still in a very precarious position. However, official sources, such as the International Energy Agency (IEA), has already begun to release information about the increase in production.
In addition, it is a well-known fact that when the price of oil is above $50 per barrel, the production and sale of shale oil becomes very profitable, and almost all producers try not to miss such an excellent opportunity to make money. In this regard, market participants are justifiably beginning to express concerns about the further movement of the price of black gold. Most likely, it will begin to decline. Investors are now closely following any news, as well as data on the amount of oil produced in the United States. In the coming weeks, it will become clear whether the worst forecast will come true, in which prices will rapidly collapse, and then move on to a slow, but still systematic recovery.
Another risk factor and significant pressure on the oil market is the strengthening of the US dollar, which has made very good progress in recent weeks. Investments in the commodity sector of goods against this background significantly lose their attractiveness, which is immediately reflected in the cost of black gold.
On Tuesday morning, the dollar index against a basket of the world's six major currencies, which include the yen, Canadian dollar, Swiss franc, pound sterling, euro, and Swedish krona, was up 0.14%, which is quite good. Moreover, there is no hint that this indicator will be reduced in the near future, so the problem for the oil market will remain relevant for some period.
Meanwhile, analysts continue to argue that all these difficulties will not last long and in the medium and long term, it has every chance to start breaking records again.