Oil prices declined during Friday's trading, which was influenced by concerns about the growth in the number of people infected with coronavirus in the United States. The market is still worried about the situation with the pandemic, which is increasingly depressing the country's economy. The main measures to contain the spread of the virus have not yet been taken. Meanwhile, experts warned that although the fall in Brent futures in the morning is quite obvious, it will soon be replaced by a noticeable rise.
This forecast was not long in coming: Brent oil futures soon rose 0.9% to $48.24 per barrel. Futures for WTI crude oil, on the other hand, fell 0.3% to $45.38 per barrel. Overall, both benchmarks have risen more than 6% this week.
Despite the depressing situation in the country and a large number of cases, news about the imminent appearance of a vaccine against the ill-fated virus somewhat eased the confusion of market players. Recall that an experimental vaccine from AstraZeneca developed jointly with the University of Oxford, can show 90% effectiveness. The likely vaccine adds to optimism, but not for everyone: some scientists are still unsure of the reliability of the results of these tests. But the possible decision of OPEC+ to extend the current restrictions on oil production, despite the price increase, comes to the defense of oil quotes. Analysts believe that the most likely scenario is the extension of restrictions for 3 months, that is, until March 2021 inclusive. News about the start of the transfer of power to Joe Biden in the US also provides significant support for the green indicators of black gold.
Still, there are a lot of reasons for concern for this energy carrier, despite the fact that the price of oil has been in the black for three consecutive weeks and has also shown strong growth since the beginning of this week.
So, the increase in oil prices occurred contrary to logic, because, from the point of view of global supply and demand, there were no reasons for this: production increased in Libya, and the coronavirus is spreading rapidly. Weekly data from the US Department of Energy showed that demand for gasoline in the US is declining, and gasoline stocks are growing. On Thursday, realism finally outweighed optimism as Brent futures closed the trading session below $48 per barrel. And despite some fluctuations in indicators on Friday, quotes may well return to $46 per barrel. And some analysts predict that oil will fall to the level of $43-$44 per barrel.
According to the analytical Agency Rystad Energy, the decline in oil demand in Europe may amount to 0.9 million barrels per day, which is significantly less than the April quarantine – 2.7 million b/d. Undoubtedly, the drop in demand for energy is due to the strict quarantine in effect in several European countries in November. The difference in this discrepancy is due to the more lenient nature of restrictions and a low percentage of their compliance.
InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.