Crude oil is more expensive - temporary optimism or actual rebound?
In recent days situation on oil has been improved. It might seem that its price has risen on ever-increasing tensions. The probability of interest rate cuts, increases in Treasury bonds and mixed feelings about the situation in the Middle East contributed to the price increase. The return itself Federal Reserve and weak data from the US labor market, deepen the feeling of complete disorientation in the markets. Therefore, will the recent optimistic oil events lead her back to the top?
Pretended optimism
Yesterday, the world went through information about incidents related to the attack on tankers in Hong Kong areas. Every day the headlines of the newspapers indicate more and more intense political tensions in the world. There were numerous protests in China on Wednesday. In the background, however, is the still unresolved conflict between the US and China. Investors seem to keep their last pace with optimism, amid all the unfavorable news from the world economy. Shawn Cruz, Trading Strategies Manager at TD Ameritrade, said in an interview with Bloomberg:
"The market is now very focused on what the Fed intends to do. Markets predict a cut next week. If we do not understand this (economic tensions and panic), we can see how investors will withdraw from it. "
Drop in oil contracts
The New York commodity exchange on Thursday (13.06) provided information on the market for contracts for black gold. The value of deliveries for August decreased by 0,22% and was quoted at USD 59,84 per barrel. Negative trends regarding the decline of futures contracts on this raw material have been practically uninterrupted for over a week.
Stocks are growing
Sale on oil, which we could observe very well last Wednesday, it was partly due to a weekly report by the US Department of Energy. The data published by him indicated an increase in commercial crude oil reserves of 2,2 million barrels. The vast majority of analysts expected their drop by about half a million barrels. Therefore, over a week ago, the largest increase in crude oil stocks and distillates since the 1990 year has been recorded.
Summation
Looking technically purely on the graph, the situation on oil is so interesting that we are in a heavily defended support zone from November last year and the end of January 2019. Considering the much larger range of the sentimental zone, its price range varies from practically 57,9 USD up to around 62 USD. Data from the market are not very optimistic, while black gold may stop for the first time for the first time practically since May this year.