Dynamics of different grades of oil, including the benchmark WTI and Brent, develops in the commodity markets in view to find a balance between supply and demand. As it can be noted in the following chart, based on the law of the market by finding an equilibrium price between customers and suppliers, to Currently the market is dominated by buyers. They are interested in low-cost raw materials supplied for further overproduction in gasoline or use in manufacturing other products.
Fundamental analysis of oil price
Let's take a closer look at what factors influence the supply of oil or, in other words, what is the main reason for the fall of the value of black gold.
First, remember that the world's leading suppliers of oil states united in the OPEC organization, which in the form of a monopoly price setting resembles many experts cartel. In December, the semi-annual meeting of the ministers of countries producing raw materials to the association's headquarters in Vienna, it was decided to increase the level set in July of limitations of 30 million barrels of daily production to the actual value.
Second, in January 2016, it could happen a historical event for the first time since the beginning of the century with Iran (the official name of the Islamic Republic of Iran) sanctions are lifted for the supply of oil to the United States after the agreement's nuclear program. They were introduced after reports on the development of the Islamic Republic of plutonium enrichment projects, which led to the introduction of the UN ban on exports of over 1 million barrels per day. The Iranian president, and officials from the relevant ministries have repeatedly noted the willingness to increase oil exports in the first months after the removal of restrictions on the 200 - 300 thousand barrels and 12 months - more than 500 thousand. The country, a member of the organization, OPEC, will also have to be consulted to develop a plan to enter the international market, but Saudi Arabia and other Gulf countries do not want to give up their market share in the export of raw materials, which can lead to dumping, to the detriment of their profits, and growth in exports in the long run the next 2-3 years.
Third, the development of oil shale in the United States and Canada has allowed the inhabitants of these countries refuel cars at the gas station at a significantly lower price, but also led to an increase in inventories in the internal storage, free volumes which reach even small values of the 70-ies. Oil traders have to rent tankers and to fill them in anticipation of the rising cost of black gold. While waiting for better times to be conserved and towers of shale fuel, the cost of production which ranges on average from $ 40 to $ 50. An additional factor will be the adoption for the first time since 1975, when the budget for the 2016 decision on the lifting of restrictions on the export of crude oil in the US border. The decision of the Congress, supported by President Obama, will lead to an increase in supply in the market.
These factors may in the coming months and quarters lead to a further increase in the volume of supply. But buyers are not ready to increase as production and consumption of oil. Rather, on the contrary, they see the prospects for reducing consumption.
First adopted on the results of the Fed meeting of 16 December decision to raise interest rates from near zero level to 0.5% and the comments President of the Federal Reserve Janet Yellen about saving rate on the growth percentage would lead to a tightening of credit conditions and a decline in investment in new deposits and investments in the company, acquiring oil as a raw material for production. Additionally, you can expect in the future 1-2 quarter 2016 strengthening of the US dollar, for which there is a calculation on the stock exchange.
Secondly, the economic situation in Asia continues to be in crisis. Industrial production, especially important for the major consumers of oil continue to decline. The volume of the finished product, published the assembly line in China and Japan, showing a decrease. China's GDP at the end of 2015 could reach economists estimate no more than 6.9%, although in recent years consistently showed growth above 7%.
Summarizing the above material, it should be noted that from the landslide to reduce the cost of crude oil importing countries gain fuel. Sellers are forced to offer discounts (discounts) at the conclusion of contracts, resulting in a reduction in the value of commodity exchanges.
Short-term and medium-term outlook for the oil market in 2016
February futures contract for the supply of a barrel of Texan oil brand WTI, concluded on the stock exchange NYMEX, is now available for $ 38. In the short term, the next few days to Christmas and the New Year and the first weeks of 2016 should expect to develop corrective movement upward to around $ 40. But technical analysis based on fundamental factors, suggests a long-term conservation of momentum in the sale of oil. The first goal for the dynamics in the 1st half of 2016 will be around $ 32 for a "barrel", which is at least 2009.Overcoming it will allow quotes to rush down to a minimum of 2003 set at a value of $ 25.32 per barrel.
Futures for delivery of petroleum of mark WTI, daily timeframe
A similar pattern is formed and European counterparts. The contract for delivery in February, a mixture of oil Brent, produced in the North Sea, can be purchased at $ 37 per barrel. After testing a minimum of 2009 ($ 36.07) a few days ago, he started the development of correctional wave to $ 40 and the upper boundary of the model of technical analysis "Falling parallel channel" (marked on the face of the chart in blue). Overcoming the perspective of the 1st quarter of the coming year of $ 36 will lead to the development of long term sell signal with a potential test "Bear" values of $ 30 and a minimum of $ 23.32 in 2003.
Futures for the supply of Brent, the daily timeframe