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Speculators are pushing oil prices to highs

Спекулянты толкают нефть к максимумам

Futures on Brent crude rose above $42

On Monday, crude oil managed to get to $42,5 per barrel and once again get closer to the maximum mark from the beginning of the year. Thus, continuing the expansion that began at the end of last week on the news about reduction of stocks and production of oil in the U.S., as well as expectations for the freezing of oil exporters. Experts believe that now the cost of raw materials pushed up by speculators. Much will depend on the meeting of oil producers at the weekend.

Oil managed to gain a foothold above the mark at $40, which gives hope to the Russian budget, which, as you know, imposed at the rate of $50.

— Indeed, last week the growth of both reference varieties has exceeded 10%, — said the chief analyst at Nordea Bank Denis Davydov.

The basis of such a significant movement on the grounds, according to him, two key factors. The first is the most speculative. These are the statistics from the Ministry of energy of the USA about unexpected reduction of stocks of crude oil and another, albeit very modest slowdown in production and reducing the number of drilling rigs. According to U.S. Department of energy last week oil production in the U.S. declined by 14 thousand barrels per day, while inventories fell to 4,94 million barrels. At the same time, according to Baker Hughes, the number of drilling rigs in the U.S. decreased by eight and is now 354 units.

Data is weekly and very volatile, so to say that this is the first changes in the market, it is still too premature, — says Denis Davydov. Particularly as other major players (Russia, Saudi Arabia and other OPEC members) remain near highs for the extraction. That is, the market is still far from balancing supply and demand.

Really, already before lunch, the cost of raw materials began to be adjusted, falling below $42. Significant deviations in the auction is also a sign of speculative sentiment. However, encouraging the fact that oil was fixed at a certain level.

According to an analyst “Zerich capital Management” Viktor Markov, due to the fact that the countries — oil producers make statements about the reduction of production in case of further price reduction. So now, said the analyst, the situation is dramatically different from last year, when oil was falling, the producers did nothing, and Saudi Arabia dumping and provided all sorts of discounts.

Now investors and speculators have been given to understand that the producers of OPEC, Russia is ready to take steps to prevent the fall in oil prices. After all, oil production has the profitability, cost, and a fall below $30 makes the extraction of alternative (e.g. oil shale) deposits unprofitable. So the oil ceased to fall and is trying to gain a foothold somewhere in the $35-40, says Victor Markov.

And the market not even really paying attention to the Iranian factor. Last week Iran declared that will not participate in frozen production at the January level, as it is interested in building indicators. Much but now, according to most analysts, will depend on scheduled for 17 April meeting in Doha, where the countries that produce the black gold, we intend to discuss measures to support oil prices and the possibility of freezing the oil.

Denis Davydov points to the second factor influencing oil prices, in his view, more significant.

Are signals from the Federal reserve system (the fed) that got markets, — said the expert. — First “minutes” of the American regulator, and then a meeting of the heads of the fed — all indicates that at least until the second half of the year the rate increase should be expected. This position gives full scope for the growth of appetite for risky assets. As a confirmation of the dollar index, which is close to the lows for the last five and a half months.

And yet, according to Denis Davydov, the market recently received a radical new signals, the increase in oil prices is mostly of a speculative nature.

— Perhaps the current surge in prices will be “closed” following the meeting in Doha, not excluded, and still more movement, including to around $45. All of the above, of course, not bypassed the Russian ruble in a positive way. The pair ruble/dollar is trading at 67. In this following Friday and even today we once again witnessed that level 66-67 paired with us dollar ruble meets strong resistance.

For the development and success of the movement then, 64-65, predicts the analyst, Brent should not only touch the levels of $41-42, but linger on them.

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