FX.co ★ Oil market continues to slowly lose positions

The oil market continues to show a sluggish reduction in positions. On Monday, the black gold began with a rise, but by the end of the day, its value was again in the red zone. The downward trend continues on Tuesday, however, it remains significantly slow.

The global demand for raw materials is still under serious pressure. There are very few prospects for its further growth while limiting factors abound. All this has a negative impact on the price of oil, which is slowly but surely falling. Nevertheless, the growth in the world's stock markets is supported by encouraging reviews that suggest that the strengthening and growth of stocks is nothing more than a signal of increasing business activity in the markets. The latter will have a positive impact on the oil market in general and the level of demand for raw materials in particular.

The shutdown of oil production stations in the Gulf of Mexico amid new threats of worsening weather conditions and approaching hurricanes is slightly holding back the fall in the cost of oil.

The price of futures contracts for Brent crude oil for delivery in November on the trading floor in London fell by 0.3% or $0.12, which moved it to the level of $39.49 per barrel. Monday's trading session also ended in the red zone with a decline of 0.6% or $ 0.22.

The price of futures contracts for WTI crude oil for October delivery on the electronic trading platform in New York also fell by 0.27% or $0.1, which moved the price to the area of $37.16 per barrel. On Monday, the brand also closed the trading day with a decline of 0.02% or $0.09.

According to forecasts published by BP Plc, a well-known company in the UK oil sector, demand for hydrocarbons and fossil fuels is unlikely to recover to pre-crisis levels in the coming years. And the point here is not that the world economy will take a long time to get out of this difficult situation. It starts to become clear that the global energy sector will completely change the course that was set earlier in the period up to 2050. Now the main bet will be placed on alternative energy sources, whose popularity is growing every day. The company offers three possible scenarios for the transition to environmentally friendly fuels. All of them are United by the common idea of reducing the demand for black gold in the very near future.

OPEC also revised its initial forecast for the level of demand for crude oil in the current year. According to updated estimates, the level of oil consumption this year will be lower by 9.5 million barrels per day and will reach 90.2 million barrels per day. Recall that the previous forecast claimed a fall of at least 9.1 million barrels per day, but the unstable situation in the world forced to worsen the data.

The forecast for the level of demand for 2021 has also been revised downwards.

At the moment, oil trading is taking place at the border of the psychologically important level of $ 40 per barrel. This is evidence that investors are beginning to realize that the decline in the hydrocarbon market may well continue and become deeper than they previously assumed. Moreover, the situation with the return of the coronavirus pandemic has not yet been determined and resolved.

Of course, the demand for oil raw materials since the first wave of COVID-19, which was observed this spring, has significantly strengthened but has not yet reached pre-crisis levels.

The pandemic continues, the number of new cases of coronavirus infection is growing every day, which, of course, sooner or later will affect the oil market. In this regard, it should be noted that the situation here will not improve in the coming months. Most likely, the fall in the cost of crude oil will continue, but not with the same force as it was in the spring.