Wednesday, 30 September 2015
The price of the “black gold” will settle in the area of $45 for a long time
While waiting for the reduction of oil reserves in the US, the price of it is adjusting upward. On Tuesday, crude oil «Brent» was traded at the level of $48.23 per barrel, while WTI crude oil closed the trading session at $45.23, according the analysts from Fort Financial Services.
The API institute - American Petroleum Institute - presented quite important data on reserves. The forecast showed an increase by 102 thousand barrels. However, the actual growth was 4.6 million barrels which is well above the forecasts. On Wednesday is expected the statistical data from the EIA - Energy Information Administration, located in the Office of the US Department of Energy.
Apart from all, oil quotations are also influenced by the information from Genscape Inc. According to this information, the volume of the “black oil” reserves in the Cushing terminal, the largest in America, was reduced by 1 million barrels last week. As usual, the data from Genscape Inc. is released before the official report from EIA and may surely influence the expectations regarding reserves reduction and in the future, as a result, increase oil demand. Also, crude oil «Brent» crept close to the bottom line of the range which lasted for five weeks, and it could trigger speculative interest.
Now, the attention of the market participants is focused on the release of the US manufacturing index, which is expected this week. If the number of the operating rigs will continue to decline, then most likely, the price will rise.
However, according to forecasts, the future oil price will not be high- at least until the overabundance of inventory disappears. The Executive Director of the agency IEA, Fatih Birol, said that allegedly oil quotes will remain at $45 for a long time. Responding to the question about the probability of overcoming the hundred-dollar price barrier, Mr Birol said that probably for several more quarters, it will be low. It should be noted that cheap oil has a very negative impact on the oil companies. As a result, in 2015 they reduce the amount of investments by 1/5.
Meanwhile, commodity producers are cutting production by stopping drilling. As it became known, Royal Dutch Shell - the largest Anglo-Dutch company refused the intentions to develop deep-water fields in the Arctic seas near the coast of Alaska. The company prepares to write-off 1 billion. because the geological exploration has fallen short of forecasts. According to the statements by the company's management, the decision is due to high costs of the project and, as they put it, "unpredictability" of the US law. The fact that the oil prices fell from $115 in June 2014 to $50 at the present time, casts under doubt the feasibility of extraction of "black gold" in remote places which is the Arctic. According to the analysts from FortFS, it is for this reason that some oil companies have frozen numerous projects. This summer, Shell, before starting the project of developing fields in the waters of the Chukchi Sea, said that the costs of finance and time will easily be repaid if the results of geological research will be positive. Shell relies on the area where supposedly there is quite an impressive amount of oil - 4.3 billion barrels.
More information regarding the oil situation may be found on the website.
Resistance levels: 48.40, 50.00
Current price: 47.95
Support levels: 47.00, 45.00
Trading recommendations:
Quotes found support at the level of 47.00 dollars per barrel. In case of the breakthrough of this level, the price will drop to 45.00 dollars per barrel. The nearest resistance is at around 48.40 dollars per barrel. In case of the breakthrough of this level, the oil price will rise to 50.00 dollars per barrel.
The API institute - American Petroleum Institute - presented quite important data on reserves. The forecast showed an increase by 102 thousand barrels. However, the actual growth was 4.6 million barrels which is well above the forecasts. On Wednesday is expected the statistical data from the EIA - Energy Information Administration, located in the Office of the US Department of Energy.
Apart from all, oil quotations are also influenced by the information from Genscape Inc. According to this information, the volume of the “black oil” reserves in the Cushing terminal, the largest in America, was reduced by 1 million barrels last week. As usual, the data from Genscape Inc. is released before the official report from EIA and may surely influence the expectations regarding reserves reduction and in the future, as a result, increase oil demand. Also, crude oil «Brent» crept close to the bottom line of the range which lasted for five weeks, and it could trigger speculative interest.
Now, the attention of the market participants is focused on the release of the US manufacturing index, which is expected this week. If the number of the operating rigs will continue to decline, then most likely, the price will rise.
However, according to forecasts, the future oil price will not be high- at least until the overabundance of inventory disappears. The Executive Director of the agency IEA, Fatih Birol, said that allegedly oil quotes will remain at $45 for a long time. Responding to the question about the probability of overcoming the hundred-dollar price barrier, Mr Birol said that probably for several more quarters, it will be low. It should be noted that cheap oil has a very negative impact on the oil companies. As a result, in 2015 they reduce the amount of investments by 1/5.
Meanwhile, commodity producers are cutting production by stopping drilling. As it became known, Royal Dutch Shell - the largest Anglo-Dutch company refused the intentions to develop deep-water fields in the Arctic seas near the coast of Alaska. The company prepares to write-off 1 billion. because the geological exploration has fallen short of forecasts. According to the statements by the company's management, the decision is due to high costs of the project and, as they put it, "unpredictability" of the US law. The fact that the oil prices fell from $115 in June 2014 to $50 at the present time, casts under doubt the feasibility of extraction of "black gold" in remote places which is the Arctic. According to the analysts from FortFS, it is for this reason that some oil companies have frozen numerous projects. This summer, Shell, before starting the project of developing fields in the waters of the Chukchi Sea, said that the costs of finance and time will easily be repaid if the results of geological research will be positive. Shell relies on the area where supposedly there is quite an impressive amount of oil - 4.3 billion barrels.
More information regarding the oil situation may be found on the website.
Resistance levels: 48.40, 50.00
Current price: 47.95
Support levels: 47.00, 45.00
Trading recommendations:
Quotes found support at the level of 47.00 dollars per barrel. In case of the breakthrough of this level, the price will drop to 45.00 dollars per barrel. The nearest resistance is at around 48.40 dollars per barrel. In case of the breakthrough of this level, the oil price will rise to 50.00 dollars per barrel.
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