17.03.202111:29 Forex Analysis & Reviews: Black gold market revives after prolonged depression

On Wednesday morning, oil prices showed a weak increase on the background of data from the American Petroleum Institute (API) with an unexpected decrease in raw materials stocks in the United States.

Thus, the price of May futures for the North Sea Brent blend increased by 0.03% to $68.41, and April futures for WTI by 0.19% to $64.91 per barrel.

A day earlier, black gold prices were steadily declining. At the same time, closer WTI futures were priced below long-term contracts. So yesterday, April futures for WTI oil on the NYMEX reported a decline of 0.9% to $64.80 per barrel. At the same time, the May contracts showed the level of $64.86 per barrel, maintaining a premium to the nearest futures for three consecutive sessions. May Brent crude futures on ICE decreased by 0.7% to $68.39.

Today, the participants of the commodity market are evaluating the latest information from the API that the reserves of black gold in the United States fell by 1 million barrels at the end of the past week, with experts predicting an increase in this indicator. Official data from the United States Department of Energy will be released on Wednesday evening. Analysts expect a reduction in inventories by 2.97 million barrels.

Experts attribute the prevailing dynamics of the decline in oil prices in recent days to the fact that American refineries have not yet recovered from the weather disasters in Texas. Recall that in February, the state was covered with snow, which caused many problems with electricity. At the same time, expectations of a new increase in black gold reserves keep investors from betting on an increase in oil prices.

Not so long ago, the increase in black gold reserves did not affect the dynamics of oil futures quotes, since this process was accompanied by a significant decrease in the volume of gasoline and other petroleum products. However, analysts confidently state today that the rally in the value of Brent and WTI, which resulted in the quotations of both brands for the past period of 2021 soared by more than 30%, may reduce the turnover. Then, prices will be under pressure due to strong stock growth, a permanent strengthening of the dollar, interruptions in vaccination against COVID-19 and concerns about the spread of new strains of coronavirus in the States.

At the same time, the demand outlook is still the most important factor for the increase in oil prices. And if the risks will continue to increase in the near future due to the spread of new strains, the market may face a pullback of quotations by 10%.