25.01.202114:19 Forex Analysis & Reviews: Oil prices sank as market mired in problems

Crude oil prices show negative dynamics on Monday morning. At the end of last week, the movement of prices for black gold was also not very significant, which is due to the multidirectional and unambiguous direction of the news.

So far, the main attention of market participants is occupied by statistics on the growth of coronavirus infection. Of particular concern is the complex epidemiological situation unfolding in China. The problem is that, despite all the efforts of the Chinese authorities, the infection again penetrated the country and began to spread actively. Last Sunday, there were already 124 new cases of infection, while just the day before there were only 80. The rapid growth makes us think about the introduction of a strict quarantine, which in turn will seriously limit economic growth in the state, as well as the demand for oil raw materials.

The outbreak of the disease in China occurred shortly before the celebration of the Lunar New Year, which may be the beginning of a new large wave of infection, as the season of traditional visits to relatives is ahead. At the same time, the government intends to introduce extremely strict restrictions on movement, which will only exacerbate the decline in the already unstable demand for fuel and oil raw materials.

News on oil production in the United States of America also does not inspire anything positive in the future. According to the latest statistics provided by the oil and gas company Baker Hughes last Friday, the number of working oil drilling rigs increased by 2 units, which is now totaled 289 units. It should be noted that a similar situation has been observed for the past nine weeks, that is, the growth has become almost stable, but so far it has not been possible to return to the pre-crisis level when the number of installations was 676 units. Of course, this makes investors think that in conditions of limited demand, the increase in production may be one of the reasons for the decline in value.

The price of futures contracts for Brent crude oil for delivery in March on the trading floor in London fell by 0.07% or $ 0.04, to $55.37 per barrel. Note that Friday's session also ended with a quite substantial reduction amounting to 1.2% or $0.69, which sent the final price at $55.41 per barrel.

The price of futures contracts for WTI light crude oil for March delivery on the trading floor in New York sank 0.02% or $0.01, to $52.26 per barrel. On the last working day last week, the mark fell by 1.6%, or $0.86, which forced it to fall to the level of $52.27 per barrel.

In general, according to the results of work for the entire past week, until January 22, oil brands showed multidirectional changes in value. Brent was up 0.6%, while WTI, on the other hand, slipped 0.3%, albeit insignificantly. Its contracts for February ceased trading on Wednesday, which recorded a decline of 0.2%.