As a result of the trading session on Thursday, Brent crude rose by 8%, closing the day at $ 26.63 per barrel. Quotes were supported by easing quarantine measures in some regions of the world, as well as data on changes in US oil reserves, which did not grow as much as experts predicted. The US Energy Information Administration (EIA) said Wednesday that oil stocks were up 9 million barrels over the week. Growth was recorded for the 14th week in a row. On average, according to a survey of S&P Global Platts analysts, experts expected an increase in reserves of 9.8 million. The day before the release of official statistics from the US Department of Energy, the American Petroleum Institute (API) reported an increase in reserves of about 10 million barrels. It also follows from the EIA report that oil reserves at the Cushing terminal (the supply hub for WTI) grew by about 3.7 million.
The factor of price growth was also the expectation of the start of reduction in oil supply by OPEC ++ countries, the agreement on which entered into force today, May 1, 2020. Despite this, the price of oil at the Asian session on Friday is declining, which confirms the doubts of traders in the effectiveness of the efforts of key oil exporters, who had previously agreed to reduce production by 9.7 million barrels per day over the next two months.
It is worth noting that the volatility in the oil market in the coming days will remain increased, especially against the background of massive sales by investors of the nearest futures and the purchase of contracts with later expiration. Recall that due to the fact that the May futures for WTI crude oil earlier went to negative territory, and also due to the persisting oversupply, many investors no longer want to keep coming contracts. They choose delivery contracts after a few months, as a result of which the volume of trading in futures with earlier dates decreased, and prices were subject to significant fluctuations. The June futures expiration will take place on May 20. Until then, an increase in reserves amid a reduction in available capacity for oil storage could well provoke another wave of hydrocarbon sales, regardless of the contracts and sites where they are traded.
Brent SellStop 26.20 TP 21.50 SL 26.90
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