25.10.201817:40 Forex Analysis & Reviews: Experts try to predict the dynamics of the oil market

Leading analysts are eager to predict how the oil market will behave in the near future. Recall the cost of Brent crude oil fell below $ 77 per barrel. However, experts believe that this is not the limit.

Significant impact on oil prices had large-scale sales in the stock market, as a result of which the cost of Brent slipped below $ 77 a barrel. Analysts are confident that this week's downtrend is due to the reluctance of traders to take risks. The reason for this behavior is a collapse in global stock markets. Any negative developments in financial markets force investors to avoid risky assets, which include oil.

Among the reasons that pushed market participants to active sales, is the intention of the authorities of Saudi Arabia to increase supplies to the global market of black gold. One of the official representatives of the kingdom said that the country could increase production to 11 million barrels per day from the current 10.7 million barrels.

The authorities of Saudi Arabia have also put forward the idea of creating a new indefinite contract that will allow the OPEC + countries to increase or decrease the volume of oil production without coordination with others.

In the near future, the Donald Trump administration plans to introduce the next tranche of sanctions against the Iranian oil industry. The fears of the leadership of Saudi Arabia were caused by the assumption that such restrictions will lead to a sharp reduction in oil supplies from Iran and to a possible shortage of supply in the world. However, at the moment, the mood has changed dramatically. Market participants realize that any shortfalls in supplies by Iranian exporters will be offset by an increase in oil production in OPEC + countries. According to the International Energy Agency (IEA), from May to August 2018, the countries of the cartel and independent oil producers increased production at the maximum rate over the past five years. During the reporting period, the cumulative production of black gold exceeded 700 thousand barrels per day, so the risk of a shortage of raw materials in the global economy is reduced to zero.

Pressure on oil quotes has a sustained increase in US stocks. According to the US Energy Information Agency (EIA), over the past week, black gold reserves in the country increased by 6.49 million barrels. According to experts, the rise continues for the fourth week in a row. It is due to the low utilization of production capacity of a number of refineries, as well as weakening demand in the domestic market.

According to analysts, if oil prices continue to decline, Brent oil may consolidate at a level below $ 75 a barrel. Experts do not exclude that the price of black gold may fall even stronger by the end of the year. As for the current quotes, they are quite suitable for opening new trading positions, experts sum up.