29.06.202015:14 Forex Analysis & Reviews: Oil prices dropped as scares of second wave of virus arise

The price of crude oil this morning continued to decline, and the growing concerns of market participants about the second wave of coronavirus pandemic remain to be the indicator of which. The number of cases is rapidly increasing not only in the United States of America but also in other regions and states.

According to recent data, the total number of COVID-19 patients in the world has already reached more than 10 million, and the number of deaths has exceeded 500 thousand.

In some US states, authorities were forced to withdraw quarantine measures in preventing further spread of the virus. It is possible to introduce new restrictions as the situation continues to intensify every day. The southern and western states of the USA are particularly affected, where the number of cases is growing rapidly, however, the situation in the rest of the country is beginning to deteriorate significantly. Investors are seriously concerned about this, which is reflected in the cost of crude oil.

At present, a new jump in the incidence rate may lead to a re-stop of the economy, since it is likely to entail a return to restrictive measures. The raw materials sector will be the first to suffer from such actions, as there will be serious pressure on demand, which is already recovering rather weakly. The second wave of the pandemic could cause irreparable damage to the black gold market.

Nevertheless, analysts are more positive and still inclined to believe that the second wave of restrictions should not be expected. At least strict implementation of quarantine measures is not expected. That is why they predict a further recovery in demand, even if it does not pass as fast as investors would like.

The price of futures contracts for Brent crude oil for delivery in August on a trading floor in London this morning fell by 1.8% or 0.74 dollars. The current level of value was at around $ 40.28 per barrel, which is still above the strategically important level of $ 40 per barrel. Recall that according to the results of Friday's trading last week, the cost of this raw material also slightly decreased by 0.03% or 0.07 dollars, which sent it to the area of 41.02 dollars per barrel and became evidence of the negative beginning on the market.

Also this morning, the price of futures contracts for WTI light crude oil for delivery in August on an electronic trading floor in New York fell 1.84% or 0.71 dollars, which moved it to the mark of 37.78 dollars per barrel. On the last business day last week, this raw material also fell in price by 0.6% or 0.23 dollars, and the price stopped at around 38.49 dollars per barrel.

In general, according to the results of the past week, Brent crude oil began to cost 2.8% less, and WTI crude oil dipped even more by 3.4%. Thus, a negative trend was formed, which the oil market has not yet been able to cope with.

Meanwhile, a little positive comes against the background of a decrease in the number of drilling rigs for oil and gas production in the United States. Their number continues to stay below the minimum values of more than a decade ago. This cannot but cause rejoice, since other oil producers, on the contrary, are opening new drilling stations amid rising oil prices.

Last week, approaching the end of June 26, the number of drilling stations in America was another 1 less, reaching a level of 188 units. This means that the total volume of raw materials production will also become lower in the near future, which is a positive factor for the market in this situation.

Recall that the number of rigs in the United States ceased to grow at the beginning of March, and since then their number has been steadily decreasing. The total number of oil and gas installations are also at a minimum mark of 265 units, which is much lower at 73% from the previous value of 702 units. For the first month of summer, the reduction was 36 units.

Nevertheless, the main factor for the movement of oil quotes is still the news about the spread of the COVID-19 pandemic. The growing concerns of the second wave of which seriously puts pressure on the cost of crude oil, and there are no reasons for breaking the current trend. The situation is also warmed by the growth of black gold reserves expected by experts in the United States, which is due in the current week. Thus, the positive is clearly less, which is likely to cause raw material prices to decline even more.