27.11.202012:06 Forex Analysis & Reviews: Cost of oil are declining again

The prices of crude oil are declining again this morning. The correction remains, which began the day before. Analysts warned that this was already expected, so it wasn't too surprising. The maximum value of the price of black gold today, which was reached recently, is left behind, while the WTI brand immediately rose by 1.5%, which moved it below the $ 45 mark per barrel.

On the other hand, the price of futures contracts for Brent crude oil for January delivery on the trading floor in London dropped by 0.17%, or $ 0.08, which sent it to the level of $ 47.72 per barrel. Yesterday's session ended with a decline of 1.7%, or $ 0.81, and the final price was $ 47.80 per barrel.

The price of WTI light crude oil futures contracts for January delivery on the electronic trading floor in New York is also declining, but much faster. This morning's decline has already amounted to 1.84%, or $ 0.84, which sent it to $ 44.87 per barrel. Yesterday, the sites were closed due to Thanksgiving holiday.

It should be recalled that the oil began to feel more or less confident when this week started, which allowed its price to clearly rise and even reach the high values recorded last March this year. However, black gold failed to hold the platform for a long time, and there was an inevitable correction, which is justified by investors' fears. Meanwhile, the transition to fix the profits was already received.

The positive news for oil raw materials was associated with the possible appearance of a widely available vaccine against COVID-19 in the near future. Several companies announced the success of their clinical trials. Nevertheless, experts warned that this is a temporary reason to be optimistic, and the hype around this will quickly fade, since market participants will still have to really look at the situation around the pandemic.

Thus, investors still decided to fix their profits by the end of the week of rapid growth, since they no longer see any particular reasons to be positive. But the price of crude oil may still end this week with a good increase.

However, it is already clear that the participants are worried again in connection with the news about the global situation of COVID-19. This fact will likely be next week's impulse, if other more significant news does not appear. Against this background, there is a serious pressure on the level of supply and demand, and it may take some time before these indicators stabilize. In this regard, market participants prefer to wait until the next OPEC meeting, where the question of whether it is worth temporarily halting the growth in oil production anticipated by the contract will be decided. Given the rising cost of black gold, this decision will be extremely difficult.

If the decision is made in favor of reducing production, this will satisfy the United States, which is on the side of strict quotas. It should be recalled that as soon as the price of oil started to rise, active drilling and production of raw materials begin, which almost immediately worsens the market situation. The growth that occurred this week has already significantly revived the mining sector, whose negative consequences can be felt in just a week. This means that the rise in the black gold's price will be even more limited in the future.

Analysts concluded that the further growth in the oil market will be challenging and not as simple as it was before.