16.09.202110:35 Forex Analysis & Reviews: Oil prices are recovering, while stocks are declining

The crude oil market is experiencing a real recovery, while the stock market is experiencing a decline in stock indices, and the main currencies in relation to the US dollar are practically unchanged.

Throughout the current week, two, oil prices sharply increased after consolidating during the previous two weeks. This is due to a number of important reasons. First, the expectation of a cold winter has led to an increase in oil demand. China plays an important role here, which has noticeably increased purchases of Russian oil. After that, raging hurricanes in the Gulf of Mexico hold back production by American companies. This is clearly indicated by the drop in crude oil inventories in the United States. In addition, the limited production of the Gulf countries due to pipeline problems contributed to the price growth in the region.

Observing the dynamics of oil prices, it can be said that the presence of real demand and falling stocks in the US continue to successfully resist the US dollar's attempts to rise amid the uncertainty of the outcome of the Fed's monetary policy meeting, which begins on September 21.

But how long will crude oil prices grow?

We believe that this will be temporary since production will increase sharply in the States with the end of the hurricane period in the Gulf of Mexico. China will also not pump oil into the storage eternally. Moreover, if the Fed makes a radical decision to change the course of monetary policy, announcing the start of reducing the volume of repurchases of government bonds and corporate mortgage securities, this will definitely support the dollar exchange rate and, as a result, pressure on oil prices will increase.

In addition, OPEC members plan to increase oil production in order to saturate the market with raw materials.

We believe that crude oil prices will stabilize in the near future and then make a downward correction. But the question is, how big this correction will be?

Forecast of the day:

The price of WTI crude oil could not break through the $ 73 per barrel mark. If it does not rise above it, and the situation around the reasons for its growth changes, a correction can be expected to the level of $ 71.00.

Spot gold may recover locally if the dollar exchange rate begins to feel pressure. In this case, its quotes will reverse and may receive local support, rising to the level of 1809.00.