Brent: The Trice of Oil Went Up Last Week
Fundamental news of last week triggered correction in oil prices.
Last Friday the prices continue to rise after the release of the data from Baker Hughes, which showed that the number of operating drilling rigs in the USA has dropped by 8 units to 354. This data is one of the main indicators of activity in the oil sector. Since the beginning of decline in oil prices, the number of operating drilling rigs has sharp so rapidly for the first time. However, despite the rise in oil prices last week, which showed that crude oil Brent has grown by 3.5 USD returning to the level of 42.00 USD per barrel, oil prices will remain under pressure as oversupply of oil in the world market continues.
Despite reduction of the US oil inventories, total stock of oil is almost 530 million barrels, which are historical highs in the past 80 years.
The week before the last Saudi Arabia has announced that the country may not sign the agreement to freeze oil production if Iran and other oil producing countries do not sign this agreement. Iran continues to increase oil production aiming to reach the level of 4 million barrels per day. Therefore, probability of reaching agreement at the meeting on 17 April in Doha is very low. But even if the meeting in Doha is not postponed, and the agreement to freeze production levels is reached, it will provide only temporary support to prices, as the oversupply of oil in the world will increase, at least because of Iran's position.
As always on Wednesday at 16:30 (GMT+2) the U.S. Department of energy will released the data on commercial oil reserves in the United States for the previous week. On Wednesday at 04:00 (GMT+2) preliminary data on oil imports in China for March will be published. Therefore, this data will affect short-term dynamics of oil prices.
On Tuesday after 22:30 (GMT+2), the American petroleum Institute (API) will report on the fall or rise of the commercial oil reserves in the United States for the last week.