After a morning collapse on Monday, the crude oil market managed to recover losses and even left in plus, however, the most interesting events will develop in the coming days.
First, about why prices did not fall, despite the failure of negotiations on freezing production. First of all it should be noted that the information the market received very much, so the volatility was guaranteed. In addition, began to unfold the story of the strike in Kuwait, which doesn’t work 60% of the capacity, production dropped by 1.7 million barrels a day.
When this strike is over, as will behave other oil-producing countries, while difficult to say, so the market reacted to the information that is already there. By the way, there is new information: Kuwait OIL Co. said that production on the Northern fields is normalized.
It is also worth noting that (if you believe the news) before the meeting in Doha was opened quite a lot of short positions and in the end we saw an attempt being closed by the big players, is quite successful.
Well, the most simple explanation: players just closed the gap, that is the price gap that was formed after the sharp opening of trading on Monday.
The penultimate candle, as the chart shows, fully closed the gap, but did not go further, so all day yesterday, in fact, nothing more than the inherent market manipulation.
Today, by the way, the declines resumed, and by 7:30 Moscow time grade Brent barrel loses a little more than 1% and costs $42,62.
And now all the attention of traders will be riveted to the data on oil reserves in the United States. The first portion of that statistic will come from the American petroleum Institute tonight, and on Wednesday will publish their data to the U.S. Department of energy. In environment statistics will also include data mining.
The day before in some mass media there was information that the company Genscape recorded a quite strong decline in stocks in Cushing, but so far it’s just rumors, and the market for them is unlikely as responsive.
From a technical point of view, oil prices can try again to test the upper border of the ascending channel around $46 per barrel. Also the variant with the resumption of falling around $39-40 per barrel.
In General, given the rich background information, it is safe to say that in the coming days, the oil market will be very high volatility. In addition, in a few weeks, the media will most likely begin to spin the story with a new meeting of oil-producing countries, and every day again will appear different leaks and statements.
Saudi Arabia’s budget will be radically reshaped
Preparing for post-oil era, Saudi Arabia will make every effort to mitigate the effects of reducing subsidies for the population, said Deputy crown Prince Mohammed bin Salman.
Now the government is developing a mechanism for providing funds to the citizens of Saudi Arabia low-and middle-income living mainly due to the subsidies, said bin Salman during an interview with Bloomberg.
Above 70% of subsidies received for the financing sector of the population with high incomes, he said.
“We don’t want to touch the lives of people with average income level, we would like to put pressure on affluent segments of the population,” said the Prince.
