Forex Analysis & Reviews: 02.11.2020 - Pressure arises: oil rapidly...

Live Chat

InstaForex Loprais Team - Official participant of the Dakar rally

This section features the most important information about trading with InstaForex. We provide both analysis from leading experts for experienced traders and articles on trading conditions for beginners. Our services will help increase your profit potential.

Become Trader

Account Opening

See also

Trading Conditions

Forex Analytics

Charts

This section is designed for those who are just starting their trading journey. InstaForex educational and analytical materials will meet your training needs. Our experts' recommendations will make your first steps to trading success simple and clear.

Start as Beginner

How to start trading

Useful information

Training and recordings

InstaForex innovative services are an essential element of productive investment. We strive to provide our clients with advanced technical capabilities and make their trading routine comfortable as we are recognized as the best broker in this regard.

Become Investor

PAMM System

ForexCopy System

Passive investments

OYS account

Partnership with InstaForex is beneficial and top-tier. Join our affiliate programs and enjoy bonuses, partner rewards, and the possibility to travel with the team of the world-renowned brand.

Become Partner

Main Page

Partner Area

Advantages for Affiliates

Registration

This section contains the most lucrative offers from InstaForex. Receive bonuses when topping up an account, compete with other traders, and get real prizes even when trading in a demo account.

All Promo Campaigns

Bonuses

Contests

Events

Holidays with InstaForex are not only pleasant but also useful. We offer a one-stop portal, numerous forums, and corporate blogs, where traders can exchange experiences and become successfully integrated into the Forex community.

Full details

Forums

We are in social networks

Forex humour

Forex Portal

InstaForex is an international brand created in 2007. The company provides services for online FX trading and is recognized as one of the world's leading brokers. We have won the trust of more than 7,000,000 retail traders, who have already appreciated our reliability and focus on innovations.

Learn More

History

Why Choose Us

InstaSport

Regulation

Company News

Awards

InstaForex Stars

InstaForex Offline

Headquarters

Key documents

Social Responsibility

InstaForex Loprais Team - Official participant of the Dakar rally

02.11.2020 12:13 PM

Pressure arises: oil rapidly cuts prices

Crude oil prices continued its negative dynamics, which has not been reversed for quite a long time. The second month of autumn was a failure for the oil products market. In October, Brent lost a total of 8.5% of its previous price, while WTI generally fell by 11%. As experts say, this is still far from the limit of the fall, since the hydrocarbon industry is now in a deep crisis.

The sharp decline in the cost of crude oil, which unexpectedly happened last month, occurred mainly against the background of serious concerns among market participants about demand, as well as the introduction of strict quarantine measures and lockdowns in most European countries. Last week, France and Germany have already decided on the necessity of the closure of the economy and the suspension of the main enterprises to cope with the situation.

The UK government, on the other hand, introduced a lighter version of the self-isolation regime starting November 5 for a period of four weeks. Whether it will be possible to cope with the rapid spread of coronavirus infection in this way is unclear. However, the fact that the economies of states will experience tremendous pressure is clear to everyone. This pressure will also affect the demand for crude oil, which in turn will negatively affect the black gold market as a whole.

Experts point out that the average level of crude oil consumption in Germany, France, and the UK is about 6 million barrels per day, which corresponds to about 6% of all world consumption, and this is a fairly large figure. Restrictive quarantine measures in these countries will indicate significant damage and a drop in demand for raw materials. And if other states, where the case of COVID-19 is no less complex, gradually begin to join the lockdown, then the crisis in the oil market will be even more global and deeper, and the withdrawal from it will be more difficult and longer.

The increase in the production of black gold in several countries also adds pressure and concerns among investors. Libya has already increased its production to 800,000 barrels per day and plans to bring this figure to 1.3 million barrels per day by the beginning of next year. Recall that at the beginning of the fall of this year, Libya's production amounted to approximately 100,000 barrels per day. The country also intends to raise its production level to 1.6 million barrels per day over the next year. The same level back in 2011 before the civil war. However, now is not the best time for such a build-up, since there is already enough negativity on the global hydrocarbon market. An oversupply will put a lot of pressure on the price level, which will inevitably go down.

In addition, the US presidential election creates another constraint. According to analysts, if Joe Biden wins, we should expect an increased portion of pressure on the oil market, since he is going to lift sanctions on Iran, which means that the supply of raw materials to the world market will grow by another 1.5 or 2 million barrels per day.

The statistics on the number of oil production facilities in the US are also not encouraging. For the sixth time in a row, capacity growth was recorded last Friday. Thus, the total number of installations for the extraction of raw materials amounted to 221 units, which is 10 units more than the previous figure. Of course, this cannot but worry investors who are concerned about such a rapid pace of production growth.

The price of futures contracts for Brent crude oil for delivery in January on the trading floor in London sank 3.27% or $1.24, which sent it to $36.70 per barrel. Friday's trading also ended in a negative zone with a drop of 0.8% or $0.32. In addition, the December contract came to an end on Friday, which also eventually decreased its value by 0.5% or $0.19.

The price of futures contracts for WTI crude oil for delivery in December on the electronic trading platform in New York also declined 3.66% or $1.31, which sent it to $34.48 per barrel. The previous trading ended in the red by 1.1% or $0.38, which caused contracts to fall to the lowest value in the last five months.

You have already liked this post today

*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.