Brent: The Price is Under Pressure Again. Fundamental Analysis of 04.05.2016.
Brent: The Price is Under Pressure Again. Fundamental Analysis of 04.05.2016.
Oil prices have been declining for the third consecutive session amid expectations that US oil inventories will again reach the record highs. According to the report presented by American Petroleum Institute (API) oil inventories in the USA rose by 1.3 million last week against the decline of 1.1 million a week earlier.
The price of futures of crude oil Brent at ICE Futures fell by 1.9% to 44.97 USD per barrel yesterday.
Amid the decline in oil prices the price of the shares of the energy companies, such as Chesapeake Energy и Marathon Oil went down by 12% and 5.6% respectively.
Increasing concerns of the decline in demand of oil in China and of the increase of oil reserves in the world put pressure on oil prices.
In the last few weeks the price of oil has reached new 5-month highs above the level of 48.00 USD per barrel of crude oil Brent due to the disruption in supply of oil from some of the regions and also due to expectation of the decline in oil production in the USA.
However, volume of oil production in the world is high, due to which investor’s expectations of the decrease in oil oversupply has dropped. Oil inventories in the USA are now at the highest level in 80 years exceeding the level of 500 million barrels. The tendency of the rise still remains.
The data from Russia shows that in April oil production in Russia amounted to 10.84 million barrels per day, which is close to 30-year highs of 10.91 barrels per day in March. This fact increases anxiety of investors who trade on the rise in oil prices.
The rise in price may force some oil producers to increase oil production in order to secure their market share. Tin this case, the long waited balance between demand and supply will not be reached again, as oversupply will continue to increase.
Today at 16:30 (GMT+2) US Department of Energy will issue the data on oil inventories for the week of 23-29 April. According to the forecast oil inventories will grow by 1.444 million barrels, which will cause additional pressure on oil prices.
Oil prices will be supported today, if the US macro-economic data, scheduled for release today from 14:15 (GMT+2), will be lower than the forecast, causing the decline in the USD.
