FX.co ★ Oil dynamics remains uncertain

Oil prices began to slowly rise on Friday. This movement is hardly noticeable, but the very fact of a change in the negative trend that has prevailed over the past two days is already a good sign, allowing us to hope for extremely positive forecasts that have been received earlier from analysts. The negative correction seems to have come to an end, which means that there is a rapid growth ahead, as far as the political, economic and, most importantly, epidemiological news in the world will allow.

The price of futures contracts for Brent crude oil for delivery in September on the trading floor in London slightly increased to 0.09% or $ 0.04 per barrel. Its current level is around $ 43.35 per barrel. Thursday's trading ended on a minor note: the fall was quite substantial and amounted to 2.2% or 0.98 dollars.

The price of WTI light crude oil futures contracts for September delivery on the electronic trading floor in New York continued to decline and fell 0.1% or $ 0.04, which sent it to the level of $ 41.03 per barrel. Yesterday, its value also stopped in the negative zone: declining to 2% or $ 0.83.

The price of the main brands of oil on the market began to decline after it was able to reach its maximum value in the last four months last Tuesday. It was not possible to keep the occupied altitude, and a correction began, which was provided by news from the United States Department of Energy, which related to the growth of black gold reserves in the country by about 4.9 million barrels, which was not expected by experts, who indicate in their preliminary forecasts the possible reduction of raw material reserves. The situation was aggravated by the fact that almost all categories of demand showed a slight decrease, which some analysts had previously warned about. However, they said it was a necessary adjustment.

Oil quotes received the most serious pressure from the increasing COVID-19 cases in the US. In addition, investors were on their guard in anticipation of new problems in the country's economy, which may arise against the background of the introduction of new quarantine measures.

Meanwhile, the US Department of Labor released a not so pleasing data. According to the report, the total number of US residents who applied for unemployment benefits increased by 109 thousand last week totaling 1.416 million people. According to experts, it should not have surpassed the 1.3 million mark. It is alarming that the growth occurred for the first time since the end of March; it was then that a record number of applications was recorded in the amount of 6.867 million.

This data is pushing crude oil prices downward as the question arises about further US economic growth. The recovery cannot start at a good pace, which means that even a rollback is possible, which is what investors in the market are so afraid of. The increase in the number of applications for unemployment benefits forced market participants to start selling their assets in the stock markets, as well as to abandon the risky sector. Traders rushed to protect their investments and began to move into more stable sectors.

However, good news is also present on the market and encouraged investors a little. The American company Pfizer signed an agreement with the US government this week for the purchase of vaccines, which it is developing jointly with the German company BioNTech. The deal amounted to $ 1.95 billion for 100 million doses of the drug.

Thus, the possible release of a vaccine against coronavirus infection in the fall calmed the markets a little, which even made it possible to draw conclusions about a fairly good long-term growth perspective.

Nevertheless, there is also enough negativity on the oil market. Investors continue to closely monitor the escalating situation around relations between China and the US. Today the conflict has been supplemented by another unpleasant and tension-causing fact. The Chinese authorities began retaliatory steps, provoked by the forced closure of their own consulate in Houston. According to the news, the PRC authorities are closing the American diplomatic mission in Chengdu. Now one can only guess about Washington's reaction to this step, and most importantly, about the retaliatory measures that can be taken. In any case, it becomes clear that the tension not only does not end, but is also growing rapidly, which market participants are so afraid of in the difficult conditions of the economic crisis associated with the coronavirus pandemic.