14.09.202011:20 Forex Analysis & Reviews: Oil finds support for growth but is quite limited

The crude oil markets finally showed positive dynamics on Monday after the black gold showed a sharp decline last week.

Over the weekend, weather conditions in the Gulf of Mexico worsened again, which forced some producers of raw materials to temporarily suspend their activities again. The threat of hurricanes, therefore, may cause some drop in the supply of hydrocarbons from this region. This, in turn, will create a shortage of supply in the market for a very short time, which only helps very limited demand.

However, Libyan authorities announced that they are going to restore the production of raw materials on their territory in the near future. This, on the contrary, puts significant pressure on oil demand. This will help increase the flow of oil to the market, despite the fact that demand is already at an extremely low level. If the energy sector of Libya reopens, the hydrocarbon market will become another problem, and this may significantly affect the cost of black gold in the near future.

British oil company BP has released its forecast for changes in the black gold market. According to its data, the demand for oil raw materials will no longer be able to reach the level at which it was before the crisis associated with the coronavirus pandemic. According to the most positive assumption of the company's analysts, global demand over the next two decades will not reflect any significant fluctuations but will remain relatively flat and in a fairly limited range. The reasons for this, according to BP, are the systematic and purposeful rejection of the use of fossil raw materials in the form of fuel and the transition to alternative energy sources.

In the weeks to come, market participants will be most concerned about the negotiation process of OPEC member countries. Next Wednesday, a meeting of the OPEC technical committee is due to take place, which monitors all agreements on the contract related to the mutual reduction of production in the countries. And the next day – Thursday - a meeting of the ministerial monitoring committee will be held.

As it became known, there are still states that do not fully meet their obligations to reduce the production of raw materials. This will be discussed first at the OPEC meeting. It is possible that sanctions will be applied to such debtors.

The price of futures contracts for Brent crude oil for delivery in November on the trading floor in London was slightly higher by 0.23% or $0.09. Its current level moved to the level of $39.92 per barrel and aimed to overcome the strategically and psychologically important mark of $40 per barrel. Note that Friday's trading closed with a decrease of 0.6% or $0.23 in the cost of raw materials.

The price of futures contracts for WTI light crude oil for delivery in October on the electronic trading platform in New York also rose by 0.46% or $0.17, which forced it to move to the level of $37.50 per barrel. However, at the end of last week, there was a drop of 0.08% or $0.03.

In general, according to the results of last week's work, Brent crude oil was worth 6.6% less at once, and WTI crude oil decreased its price by 6.1%. Thus, this was the second consecutive drop in the price of both brands. The reasons for the negative are still the same – very restrained demand and an increase in the level of reserves in the United States of America.

In general, according to the results of last week's work, Brent crude oil prices immediately decreased by 6.6%, while WTI crude oil dropped its price by 6.1%. This marks the second consecutive price drop for both brands. The reasons for the negative are still the same – very restrained demand and an increase in the level of reserves in the US.