FX.co ★ Oil is plunging after recent all-time records

On Wednesday, global oil prices continued to fall for the second consecutive session. The main reason for the negative dynamics of the commodity market is investors' concerns about demand amid growing coronavirus cases around the world. Another downward factor is automobile fuel deficit in a number of large states.

While writing this article, Brent crude oil futures for December fell by 1.68% to $77.76 per barrel, while November futures dropped by 1.38% to $78 per barrel. The day before, November contracts lost 0.6% ending at $79.09 a barrel.

WTI futures for November went down 1.7% to $74.01 per barrel. At Tuesday's close, these contracts declined by 0.2% to $75.29 per barrel.

At the same time, global total oil inventories balance near the highs, last recorded in late 2018. The main reason for the market euphoria is limited supply. Notably, crude oil production in the Gulf of Mexico, suspended due to Hurricane Ida, has not been finally restored, while oil reserves are reaching 3-year lows.

On Wednesday investors' attention is focused on fresh statistics from the American Petroleum Institute. According to API, the amount of US crude oil stockpiles rose by 4.2 million barrels last week. However, commodity market analysts predicted the index reduction. The weekly crude oil inventories data by the US Department of Energy are due on Wednesday evening . According to experts' preliminary forecasts, the decline by 1.652 million barrels is expected. Moreover, in case the US DOE confirms the information on growth of oil stockpiles from API, it will be the first rise of the indicator in eight weeks.

Investors are confident that OPEC and its allies will report keeping crude oil supply restrictions during next week's meeting. Despite the fact that the situation has changed very little, oil broke above $80 per barrel, which may provoke pressure on OPEC members.

The day before, analysts downgraded their forecasts of China's economic growth this year due to restrictions in energy consumption. According to the new scenario, an increase in China's GDP by 7.8% compared with 2020 is expected. Earlier, experts predicted a rise of 8.2%.

Experts are concerned that the housing market difficulties in China and problems with power supply may deeply affect oil demand.

As for analysts' short-term forecasts regarding global oil prices, they state that the prices will continue to grow and will reach $85-$90 per barrel for Brent by the end of the year.