FX.co ★ Oil prices rise and break eight-month records amid recovery in demand

Global oil prices are showing strong growth on Thursday morning against the backdrop of declining reserves in the United States and optimism about the prospects for a recovery in demand.

The price of February futures for the North Sea oil mixture Brent rose by 0.45% to $48.75 per barrel, and January futures for Brent increased by 0.6% to $48.9 per barrel. January futures for WTI crude oil rose 0.33% to $ 45.86 per barrel.

Recall that at the close of trading on Wednesday, WTI futures on the NYMEX exchange closed at a record high in more than 8 months and rose by 80 cents (1.8%) to $45.71 per barrel.

The world has not seen such growth since the spring when oil prices turned negative. In connection with this event, the black gold market was really euphoric. Of course, this promising trend may stop at any moment, but the news of recent days shows that supply and demand are moving in the right direction.

In addition, Chinese and Indian refineries are actively buying crude for January delivery, which indicates strong demand in the Asian region.

The outlook for a recovery in demand over the past few days has also significantly raised market sentiment. As a result, the prices for black gold have been growing for the fifth session in a row. Another reason for such a spectacular oil rally is the hope of investors for an early start of the massive use of drugs for COVID-19, the successful tests of which are increasingly announced by pharmaceutical companies. It is clear that the coronavirus pandemic has seriously eroded global oil demand due to tight territorial restrictions, travel bans, and border closures.

The data on oil reserves in the US added additional optimism to market participants. According to the publications of the Energy Information Administration of the US Department of Energy, commercial stocks of black gold in America (excluding the strategic reserve) fell by 0.8 million barrels (0.2%) and reached 488.7 million barrels over the past week. At the same time, analysts predicted an increase of 0.1 million. At the terminal in Cushing, resources fell by 1.7 million barrels. Gasoline stocks rose by 2.18 million barrels to 230.15 million barrels, and distillates decreased by 1.44 million barrels to 142.63 million barrels.

Oil data were released a day earlier than usual in light of the celebration of Thanksgiving on November 26. In connection with the national holiday, oilfield services company, Baker Hughes, also released information on the number of active rigs in the US on Wednesday. According to the data presented, the number of drilling rigs during the current week increased by 10 units - to 241.

In addition, prices for black gold rose amid hopes that OPEC + countries will extend the current restrictions on total oil production for another 3-6 months. Previously, the alliance planned to reduce production restrictions from January 1, but the final decision was postponed to December 1. In this regard, analysts are constantly warning that in the short term, oil prices will be vulnerable to reports of disagreements in OPEC, which could threaten the continuation of production cuts in such an uncertain period. Note that recently, the media have been increasingly reporting contradictions between members of an international organization.