11.02.202111:33 Forex Analysis & Reviews: Oil prices sagged as traders decide to take profit

Oil prices sagged Thursday morning following the record-breaking rally that took place the day before. Investors, on the other hand, continue to take profits after the price rally.

The price of April futures for the North Sea Brent blend on the London ICE Futures Exchange sank 0.5%, to $61.16 per barrel. At the close of the trading session on Wednesday, these contracts rose by 0.6%, to $61.47 per barrel.

The price of March futures for WTI crude oil on the New York Mercantile Exchange (NYMEX) fell 0.49%, to $58.39 per barrel. At the close of trading on February 10, these futures rose in value by 0.6%, to $58.68 per barrel.

On Wednesday, Brent blend rose for the ninth straight session, and WTI rose for the eighth session. These are the longest periods of permanent growth for both grades of oil since the beginning of 2019.

Earlier, the US Department of Energy reported a significant decrease in the country's black gold reserves by 6.6 million barrels. Experts, however, predicted a decline of 2.7 million barrels. Stocks at the terminal in Cushing, Oklahoma, from which the supply of oil traded on the NYMEX is carried out, decreased by 700,000 barrels.

Since America has always been the leading consumer of oil in the world, the news of a tangible decrease in reserves has become an incentive for a spectacular rise in the price of black gold.

Therefore, on Thursday morning, traders decided to take profit. Despite this, the price of oil remains in the area of annual highs. The main reason for the price optimism is the massive vaccination, which gives hope for the early recovery of the global economy. At the same time, the strict observance by the OPEC + participants of the terms of the agreement to reduce oil production balances supply and demand in the commodity market.

Investors also worry that market recovery could push large producers like Saudi Arabia to ease production cuts. Experts shared the same sentiments, saying that OPEC may initiate the resumption of production at a meeting in March in connection with a sharp recovery in oil prices.

Recall that according to the January agreement, several countries agreed to further reduce oil production by a total of 1.425 million barrels per day, of which 1 million falls on Saudi Arabia. At the same time, the Iraqi oil minister said on Wednesday that he does not expect an extension of the voluntary reduction of oil by Saudi Arabia after two months.

Experts assume that by the end of 2021, the price of Brent crude will rise to $70 per barrel, as the current OPEC + agreement restricts supply, while demand is growing faster than analysts predicted.