[ad_1]
The price of US crude oil on the world market has been rising steadily since the beginning of the year. Although there may have been price movements tied into the ranges and slight corrective twists at that time, the overall price trend for each month of this year has been on the rise. This is clear from the weekly chart showing the progress made by crude oil prices on the global spot market. In addition, the factors that sustained crude oil prices up this month were higher than in the past two months. However, crude oil prices continued to disrupt the influence of weekly data on US inventories. For the month of March, the value of US spot crude oil increased by more than 7% by comparing monthly opening and closing prices.
The pair continued to reach new monthly highs during the month as crude oil bulls seem to have found a form of fundamentally reliable strength. The month started on a positive note, buoyed by optimism over Sino-US trade talks and headlines that indicated that Venezuela's crude oil production and exports were down 60 percent. because of the sanctions imposed by the United States. In addition, news that OPEC plans to maintain its production and supply restricted until June 2019 and that Russia has finally begun to take steps to ensure that its production is in line at the agreed levels at the summit of OPEC + at the end of March, added positive support to the bulls of crude oil. However, an increase in weekly stocks of US crude oil has limited gains.
Supply disruptions from the Middle East underpin crude oil prices
Since the beginning of the year, the implementation of OPEC's production and supply reduction agreements has regularly contributed to improving the supply / demand ratio in the global market, which has been a long-term term at the base of crude oil prices. The first half of March was also corroborated by reports that Saudi Arabia planned to reduce April output by less than 7 million bpd by keeping production well below the target of 10 million bpd. in the United States to consider the following scenario: zero import of crude oil from Venezuela for the first time in its history. Meanwhile, due to a sudden power outage, production and supply of crude oil were abruptly halted. This change has significantly altered the dynamics of global supply and demand, influencing a new wave of sharp price increases.
In the second half of the month, crude oil bulls traded at monthly highs supported by OPEC's supply-side measures. But the price quickly hit new highs in 2019 and exceeded $ 60 US, both in the spot and futures markets, while the supply disruption for Sudden electricity lasted longer than usual. While profit recognition activity led to lower prices compared to the peaks of 2019, the supply dynamic influenced by US sanctions against crude oil exports from Iran and Venezuela and the OPEC's supply-side reduction measures allowed demand to recover quickly above $ 60. A sudden and expected pull of weekly data on crude oil inventories in the United States, both in API stocks and in the EIA stock, also helped to better support crude oil bulls . However, declining bond yields in the global market, which led to an increase in less risky trading and fears of an economic slowdown, had an impact on crude oil prices.
Fundamental support is approaching bulls, but gain may be capped
A slowdown in global economic activity would reduce demand for crude oil, again changing supply / demand. But this time, the change would favor the bears of crude oil. And crude oil inventories in the United States rose again during the last week of March, according to weekly inventory data. As a result, the price of crude oil has been reduced to US $ 58. But the rebound in the global bond market has sparked investor anxiety over the global economic slowdown and the easing of risk aversion. This allowed the price of crude oil to recover $ 60 and close the month on a positive note. In the future, price developments should remain positive in the global market, but gains should be limited. While geopolitical issues remain unresolved until now and headlines show signs that neither the Sino-US trade war nor Brexit are about to yield positive results, a certain sentiment on the part risk-averse investors and the economic slowdown will continue in the market providing crude oil bear with fundamental support. Even if the information suggests that Russia has reached the OPEC supply reduction target and Saudi Arabia is cutting production, investors have been expecting this for a long time and are likely to see a recovery in course. While confirmation of these events will result in a sharp rise in crude oil prices, bulls will see strong resistance rising to US $ 62 and price action will remain tied to a positive bias throughout of the month, unless a totally unexpected update or weekly US crude oil stocks see consecutive updates with draw data in stocks.
Please, do not hesitate to tell us what you think in the comments below.
Source link
