08.01.202114:03 Forex Analysis & Reviews: Oil prices soar as positive news stormed the market

Crude oil prices jumped Friday morning after a fairly substantial increase in the price of both benchmark brands was noted over the last three trading days. Positive news stormed the market on Friday, which allows us to hope that the rise will be so significant that new records of growth in value will be broken.

Over the past few days, market participants have reacted seriously to the news that Saudi Arabia intends to voluntarily reduce its own production of black gold starting February to March of the current year in order to maintain a balance in the crude oil market. In addition, the level of hydrocarbon reserves in the United States of America was significantly lower, which indicates another significant reduction. At the same time, it is worth noting that, although experts' forecasts indicated an expected fall, they were much more modest than real data. Thus, the level of reserves turned out to be as much as 8 million barrels lower than preliminary calculations.

The approaching inauguration of Joe Biden as the new president of the United States has sparked more optimism amongst investors. The optimistic mood is manifested against the background of the victory of the Democratic party in the elections in the state of Georgia. This may be the key moment for the US Senate to eventually have a Democratic majority. This news is supported by the forecasts that the Democrats in Georgia may get two Senatorial seats at once. This state of affairs is more than satisfactory to the oil market, of which participants react accordingly.

The news about the election of Democrats is especially important in relation to the adoption of new stimulus measures in the country as they are the ones who are on the side of expanding the stimulus package and making payments larger. This, in their opinion, should significantly accelerate the entire process of the economic recovery of the state, which has been seriously affected by the crisis caused by the impact of the coronavirus pandemic. And a more rapid economic recovery can perfectly support the demand for energy resources, which, in particular, includes the oil market.

However, the market is still bombarded with the sharp deterioration in the epidemiological situation with coronavirus in certain countries of the world. Japan, in particular, was forced to introduce a state of emergency in certain territories. Its capital, Tokyo, and a number of adjacent districts fell under severe restrictions. The reason for this decision was a sharp and rapid increase in the number of new cases of the disease.

A negative change in the situation is also observed in China, where the maximum number of infections detected over the past day was similar to what was recorded in mid-summer. All this, of course, cannot but cause a certain degree of doubt that the pandemic will soon recede.

The price of futures contracts for Brent crude oil for delivery in March on the trading floor in London rose 0.7% or $0.38, which sent it to $54.76 per barrel. Thursday's trading also ended with an increase (by 0.2%, or $ 0.08), which sent the price at $54.38 per barrel.

The price of futures contracts for WTI light crude oil for February delivery on the electronic trading platform in New York rose by 0.65% or $0.33, which sent it to $51.16 per barrel. Thursday's trading session was also successful for the brand with a price increase at $50.83 per barrel.