07.08.202011:58 Forex Analysis & Reviews: Where are we going? Cost of oil is slowly declining

This morning, oil raw materials start with a negativity once again: a reduction in cost was recorded for all items. However, in contrast to the previous trading days, yesterday's trading also closed in the red zone, which ended the series of rallies that had lasted for four consecutive days. Nevertheless, oil is not being adjusted too significantly, and at the end of the current week, it is likely to end its trading with a good increase in the price (at least 4% compared to the increase of the previous week).

Yesterday, the main attention of market participants was occupied by statistics from the labor market of the United States. As it became known, the total number of those who applied for unemployment benefits declined by 249 thousand people for the first time last week. Now, their total number is at the level of 1.186 million people, which is the minimum value in the country since the beginning of the coronavirus pandemic. Of course, even such not very impressive results cannot but please the markets and the government of the state. Experts began to argue that the US economy has chosen the right path for its recovery, which is reflected in the main statistics. This will also provide good support for the oil market in the near future, which is now in a rather difficult situation.

Iraq should also ensure a positive development of events in the oil market. So, the country's authorities made a statement that they are ready to reduce the production of raw materials in the country by about 400 thousand barrels per day in the last month of summer. This step is necessary to compensate for the surplus production that Iraq had under the agreement with OPEC in the previous period, before the moratorium was eased. Of course, this will have a positive effect on the level of supply and demand in the market, especially in the context of increasing hydrocarbon production by those countries that have fulfilled the first part of the contract and have now entered the second phase.

In addition, investors still hope that an agreement on a new stimulus package in the United States of America will be signed very soon. The situation is already seriously tense, and an urgent solution is simply vital, especially since the government is going on vacation.

On the other hand, good growth in oil prices in the coming week was also provided by the reduction of oil reserves in the US and the rapid collapse of the US dollar index ICE Dollar, which plummeted to the lowest values for the last two years. These factors seem to be gradually losing their influence on the market.

The price of futures contracts for Brent crude oil for October delivery on the trading floor in London on the morning of the last business day this week is down 0.31%, or $ 0.14. Its current value was at $ 44.95 per barrel. At the close of yesterday's trade, the brand also declined in price, but only slightly - minus 0.2%, or $ 0.08.

Today, the price of futures contracts for WTI light crude oil for September delivery on the electronic trading floor in New York went down by 0.41%, or $ 0.17, which moved it to the level of $ 41.79 per barrel. Trading on Thursday also ended in the red zone: the decline was 0.6%, or $ 0.24.

The main concerns of market participants today are related to the fact that demand and, accordingly, fuel supplies in the near future will be very weak, since the negativity from the impact of the global coronavirus pandemic has not yet been leveled.

In addition, the press should receive a report on the number of operating oil and gas installations in the United States today, which can also change the balance of power in the market. According to some preliminary data, the American side will start launching additional production capacities amid rising oil prices. This means that the pressure on the market will increase and the price will continue to move in the opposite direction.