FX.co ★ Absence of good support: oil prices continue to decline

The price of crude oil again cannot choose the vector of its movement. It slightly corrected downward on Thursday morning, but the movement was so insignificant to assert that prices practically stand still. However, on Wednesday, the price grew slightly against the background of the release of another portion of statistical data on the level of raw materials in the United States of America. The statistics turned out to be so good that it encouraged market participants and made prices rise slightly. Nevertheless, the future of the oil market remains rather vague: development prospects are already uncertain, and in the context of the spread of coronavirus infection in America and Asia, it becomes completely incomprehensible.

Another pressing factor is the new (softer) level of oil production, which was adopted in accordance with the continuing OPEC agreement to reduce the production of raw materials in the world. Added to this is the expected increase in oil refining in the United States since after a steady decline of capacity in the country, previously shut down and frozen stations began to resume their activities.

All this, on the one hand, will exert serious pressure on the black gold market, on the other hand, it will become a certain test of the market for stability. If the market copes with this negative, then the rapid and unshakable growth, which analysts previously talked about, will follow.

The United States Department of Energy released a report on Wednesday which indicated a decline in oil reserves in the country last week. Moreover, the drop became significant and turned out to be within 10.6 million barrels. Such success has not been noted for a long time, since about late 2019. The preliminary forecasts of analysts were much more modest than real figures. Thus, it was expected that there will be a reduction, but not more than 12 million barrels.

Stocks of crude oil on the territory of the storage facility in Cushing, which is a strategically important point, increased slightly by 1.3 million barrels, which, however, is not at all critical.

The extraction of raw materials on the territory of the state remained unchanged. Its level remains close to 11.1 million barrels per day.

However, US gasoline stocks for the third week of July, on the contrary, increased by 700 thousand barrels. Distillates rose by 500 thousand barrels. This, of course, is also far from the highest figures, but they again contradict the preliminary data. Experts hoped that gasoline stocks would be reduced by about 2 million barrels, while the level of distillates would remain the same.

Meanwhile, the US stocks look as ambiguous as the situation on the raw materials market. Investors certainly appreciated the fact that crude oil inventories had dropped significantly, but the increase in gasoline and distillate inventories limited that joy.

The price of futures contracts for Brent crude oil for September delivery on the trading floor in London fell slightly by 0.16% or $ 0.07, which sent the price to $ 43.68 per barrel. Note that Wednesday's trading ended with a good rise in the price of contracts by 1.2% or $ 0.53, which allowed it to reach the range of $ 43.75 per barrel.

The price of WTI light crude oil futures contracts for September delivery on the electronic trading floor in New York also declined by 0.22% or $ 0.09 and stood at $ 41.18 per barrel. Nevertheless, the trading session on Wednesday ended fairly with growth amounting to 0.6% or $ 0.23, and the price moved to the level of $ 41.27 per barrel.