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15.01.202112:21 Forex Analysis & Reviews: Oil correctively reduces the cost and is preparing for a new breakthrough

Exchange Rates 15.01.2021 analysis

This morning, the price of crude oil continues to remain in the negative zone. Despite the possibility of expanding the incentive program in the United States of America that is becoming clearer and closer, the decline still continues. The final decision on this issue will be made after the inauguration of the new president Joe Biden.

Yesterday, the next American leader quickly made a statement to the general public, in which, among other things, much attention was paid to the new plan to support the economic growth in the country. According to Biden's intentions, the amount of support will be at least $ 1.9 trillion. In this case, it will only be possible to talk about an effective fight against the crisis that has arisen against the background of the influence of coronavirus infection. Without this active recovery of the state's economy, it will not work. The package of proposed financial incentives will have to include quite a few items of expenditure, among which are direct payments to citizens of the country, as well as allowances for unemployment benefits, an increase in the minimum wage, etc. In general, the program causes quite positive responses,

The price of futures contracts for Brent crude oil for delivery in March on the trading floor in London fell by another 0.46% or $ 0.26 this morning, which moved them to the mark of $ 56.16 per barrel. It is worth recalling that yesterday's trading ended on a positive note: it was recorded although not too large, but with an increase in the cost of 0.6% or 0.36 dollars and the closing price was 56.42 dollars per barrel.

The price of futures contracts for WTI light crude oil for February delivery on the electronic trading platform in New York fell by 0.22% or $ 0.12 this morning. Its current level was $ 53.45 per barrel. Thursday's trading ended in the green zone: contracts began to cost significantly more by 1.3% or $ 0.66, and the final price consolidated at $ 53.57 per barrel. Thus, the WTI brand over the past month showed a fairly significant breakthrough, which even raised it to the maximum values for the last year.

The fact that OPEC has changed its estimates of demand for black gold in the past year has somewhat improved the mood of investors. According to earlier reports, demand was expected to decrease by 9.77 million barrels per day. But the new data indicate that demand decreased slightly less by 9.75 million barrels per day. In general, the fall, therefore, will be about 90.01 million barrels per day. Even if the difference does not seem significant at first glance, however, this growth has already changed the mood of market participants for the better.

At the same time, the forecast for an increase in oil demand this year has not yet been adjusted. It is worth noting that according to the latest data, the growth rate of demand should grow by an average of 5.9 million barrels per day, that is, to reach the figure of 95.91 million barrels per day.

According to most analysts, now is a favorable moment for oil to get out of the crisis and start rapidly raising its value. At least in the medium and long term, there is a chance for this to happen. The only thing that can complicate the situation is the complex epidemiological situation in the world and in certain regions, which will require the introduction of more stringent restrictive measures and new lockdowns. In the meantime, experts are counting on a rally in oil prices and market participants are tuning in to a positive wave.

And this calculation can be justified, because there are several indirect but quite significant factors that confirm the validity of hopes. First, the demand for petroleum products is still subject to seasonal fluctuations. January is traditionally a period of high demand for black gold in the US market, as can be seen from the reports of the Ministry of Energy, which continues to record a reduction in the level of raw material reserves. Secondly, the cold weather has come to the territory of European and Asian countries, which means that the consumption of hydrocarbons will grow. All this can be a good help for increasing the cost of oil on world markets.

Maria Shablon,
Analytical expert
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