29.09.202010:08 Forex Analysis & Reviews: Oil prices still inflicted by COVID-19 pandemic

Crude oil prices continue to decline on Tuesday still against the background of the growing concerns in the increasing coronavirus cases around the globe. This, in turn, makes market participants think about the pace of recovery in the global economy, which has not yet fully recovered from the first wave of the COVID-19 pandemic. All this, of course, will put serious pressure on oil demand and the cost of raw materials, which is already extremely unstable in recent weeks.

At present, the main attention of investors is occupied by a report from the US Department of Energy, which is published every week and reflects the level of black gold reserves in the country. The next report is expected to be released to the press tomorrow, but for now, analysts are speculating that last week may be marked by an increase in stocks, which will happen for the first time in three consecutive weeks. Of course, if this information is confirmed, the crude oil market will face another problem.

According to initial estimates from analysts, the level of crude oil reserves in the US rose by 1 million barrels last week, which ended September 25. The level of fuel and gasoline stocks, in contrast, showed a decrease of 1.2 million barrels, indicating the eighth consecutive decline. However, until these data are confirmed, investors are in no hurry to pay special attention to them.

Statistics on coronavirus infection are now causing panic among investors. According to the latest news, the number of deaths has already exceeded 1 million. Since the beginning of the pandemic, the number of infected people has grown to 33.3 million. Moreover, the dynamics of the increase in cases, which have been observed in recent weeks, force the authorities of some countries to return to restrictive quarantine measures.

Experts believe that the only way to increase prices in the global oil market today may be greater confidence and optimism of investors, which is complicated since the market is still bombarded with negative factors. The second wave of the coronavirus pandemic hangs like a sword of Damocles over the countries of the world, limiting the recovery of their economies to the extent previously assumed. Moreover, we should not expect the epidemiological situation to normalize in the near future. Experts believe that for at least a few more weeks there will be a rapid increase in infection.

The price of futures contracts for Brent crude oil for delivery in November on the trading floor in London fell 0.54% or $0.23, which sent it to the level of $42.20 per barrel. Monday's trading ended quite positive for the brand with an increase of 1.2% or $0.51. Note that the oil contracts for delivery in November will expire the day after tomorrow.

The price of futures contracts for WTI crude oil for delivery in November on the electronic trading platform in New York also declined by 0.69% or $ 0.28, leaving its current level at $40.32 per barrel. Monday's trading ended on a positive note with an increase in its price by 0.9% or $0.35.