25.11.202010:07 Forex Analysis & Reviews: Oil market confidence continues to push prices up

Crude oil prices rise on Wednesday morning and already managed to reach maximum levels in the last six months. And it seems like the upward movement is not yet to end.

Market participants are still in high spirits about the prospects for the release of a vaccine against coronavirus infection for widespread use. Demand for crude oil has been well supported, as there are fewer factors to reduce, although there is no complete certainty about the timing of the vaccine's introduction. Nevertheless, the raw materials market has surely had enough pessimism, due to recent events, that the consecutive breakthroughs in the drug against COVID-19 have become a light at the end of the tunnel for it. It doesn't matter when this light comes close: just the hope of a positive is enough for black gold to finally start to break the deadlock.

Another strong supporting factor for the oil market was the recognition of Joe Biden as the winner of the recent US presidential election. Recall that just a few days ago, Donald Trump agreed with the results of the vote and gave orders to prepare the transfer of power to his competitor. This was a wake-up call to the fact that political differences in the United States of America have been overcome and the situation of uncertainty that caused a negative wave in the world markets is gradually being leveled.

In addition to this, the succeeding US President Joe Biden has already begun to form his team. In particular, it was announced that former Federal Reserve chief Janet Yellen is considered as the most promising candidate for the post of Treasury Secretary of the country. This fact further removed the issues that were accumulated during the presidential race and provided good support not only to the American markets but also to the markets of other regions and the oil market.

It should be noted that the oil market is currently faced with a sore and extremely acute issue of the possible reduction in the production of raw materials, which may be announced by OPEC. According to the agreement signed this year, production should increase at the beginning of next year, but the difficult situation in recent weeks has forced the organization to think about postponing the increase, which should stabilize the situation of black gold. The next OPEC conference is scheduled for December 1, at which a decision on further actions will be made. According to analysts' assumptions, the organization has no choice but to extend the terms of current production cuts for at least one subsequent quarter. However, the rapid increase in prices in the oil market, which has been observed over the past and current weeks, may complicate the decision-making process of the organization's management.

Preliminary data on the level of growth of crude oil reserves in the US was released on Tuesday. According to research by the American Petroleum Institute (API) reserves of raw materials increased by 3.8 million barrels last week, ended November 20. The level of gasoline reserves also increased by 1.3 million barrels, but distillates, on the contrary, reduced by 1.8 million barrels. Investors did not react to these unsatisfactory statistics and are waiting for official data from the US Department of Energy.

The price of futures contracts for Brent crude oil for delivery in January on the trading floor in London rose 0.81% or $0.39, which sent it to $48.25 per barrel. Tuesday's trading session ended with an increase of 3.9% or $1.8, which sent the closing price at $47.86 per barrel.

The price of futures contracts for WTI light crude oil for delivery in January on the electronic trading platform gained 0.65% or $0.29. Its current price is still $45.2 per barrel. Tuesday's trading session ended with an increase of 4.3% or $1.85, which sent the price at $44.91 per barrel.

For the first time, oil brands have been able to achieve such high indicators in the last six months. Moreover, experts believe that growth will not stop there. In general, the increase in the cost of crude oil has been going on for five trading sessions in a row. During this time, Brent was able to grow 9.2%, and WTI by 8.3%, which is an excellent result and gives investors hope that the price will still be able to step over the strategically important mark of $45 per barrel.