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Step forward, two steps back. WTI oil goes down again

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Step forward, two steps back. WTI oil goes down again
August 17
09:00 2018

Today’s trading session began with a decrease in oil quotes. WTI crude oil is getting cheaper seven weeks in a row. By the way, last time the market experienced a similar situation three years ago.

At the moment, October futures for Brent crude oil (traded on the London Stock Exchange ICE Futures) have fallen by $ 0.04 to $ 71.39 per barrel. As a result of yesterday’s session, the contracts rose by $ 0.67 to $ 71.43 per barrel. Thus, the intraday gain amounted to 0.95%.

At the moment September futures for WTI crude (traded in electronic trading on NYMEX) have dropped by one cent to a value of $ 65.45 per barrel. During the last trading session, contracts fell in price by $ 0.45 (0.69%) to the mark of $ 65.46 per barrel.

In just a week, both WTI and Brent crude oils have shown a significant decrease in quotes: WTI fell by 3.2%, Brent dropped by 1.2%.

The reasons for such a serious decline are fairly clear: the growth of commodity stocks in the US and the strengthening of the national currency.

Oil reserves in the United States increased by 6.81 million barrels last week. Only at Cushing oil storage facilities (oil traded on NYMEX is stored there) black gold reserves increased by 1.6 million barrels. By the way, the increase in fuel reserves is not typical for August; usually the reserves are depleted, but not replenished in the last summer month.

A strong US dollar is the second reason for oil weakening. The problems with Turkey, a decrease in investment into emerging markets led to the strengthened national currency. A strong dollar always reduces interest in commodity assets, including, of course, both crude oils.

We will continue to monitor the Turkish crisis and the state of the global commodity market. It is not yet clear in which direction the situation will develop.

 

The material was prepared with the participation of Katya Gordon,
a leading analyst of the brokerage company CT Trade

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