02.09.202011:18 Forex Analysis & Reviews: Oil market prospect: price hike may continue

The price of crude oil continues to rise on Wednesday morning. Market participants are waiting for the official report from the US Department of Energy on changes in the stocks of raw materials, gasoline, and distillates in the country.

The American Petroleum Institute (API) released a report on Tuesday stating that there was a significant decrease in the level of oil reserves last week, ended August 28, amounting to 6.4 million barrels. There was also a decline in the total volume of gasoline in the US by 5.8 million barrels and distillates by 1.4 million barrels.

According to analysts' initial reports, there is an estimated decline of 1.2 million barrels in the volume of crude oil reserves in the US for the previous week. Gasoline is also expected to decline by 4.7 million barrels, including distillates by 900,000 barrels.

If the initial reports turn out to be accurate, this will give the crude oil market an additional and very serious support factor which will be known upon the release of the report by Wednesday afternoon.

The result of the most recent PMI statistics in both the US and China turned out to be positive which greatly brought support in the raw materials market on Tuesday. China's PMI managed to reach the highest level after nine years over the last month of the summer.

Business activity in the US manufacturing sector also recorded growth. The corresponding index in August also jumped to a record level after two years which surprised experts, who did not predict anything like this.

The price of futures contracts for Brent crude oil for November delivery on the trading floor in London went up by 0.83% or $ 0.38 on Wednesday moving it to the level of $ 45.96 per barrel. Note that Tuesday's trading also ended in the green zone with a jump in the price of 0.7% or $0.3 per barrel.

The price of WTI light crude oil futures contracts for October delivery on the electronic trading floor in New York also recorded growth by 0.89% or $ 0.38, pushing the mark to $ 43.14 a barrel. Tuesday's trading also turned out positive with an increase in the price of raw materials by 0.4% or $0.15.

Most analysts say that Brent now has every chance to step over the strategically and psychologically important mark of $46 per barrel and continue its ascent further. This is at least indicated in the outlined economic recovery in the PRC and the United States, analysts stressed.

However, the main wave of support for raw materials should come from changes in the volume of oil reserves in the US. If the decline in the level is officially confirmed, then the price of oil will inevitably burst upward and even be able to reach the next benchmarks.