Oil market likely to stay highly volatile

Posted 15 February, 2019

The oil prices have kept improving step-by-step in the second half of the week. The Brent quotes have not only checked the $65 handle but even managed to hit it reaching some $65.14/bbl. As a result, the oil market posts quite positive week especially taking into account insufficient luck for an upward break observed lately.

The market will become able to realize the stability of the current upward impulse after the weekend as the global markets will start reflecting the results of the trade talks as well as the future of the US government. For reference, US President Donald Trump probably intends to approve the agreement with Congress.

Once investors assess the talks and take decisions the market outlook will depend on the sanctions against Iran and Venezuela, perspectives of global supply increase, global demand outlook as well as the state of world economy, in particular, a Chinese one. An additional factor that may have influence will be the actions of the OPEC members. As a result, it is clear that the prices can face pressure from different fronts in the near term, so the market will stay highly volatile.

With a threat of global demand slowdown, the chance that OPEC oil may enjoy weaker demand in 2019 is getting stronger. Thus, the cartel will have to consider extending the production restriction agreement.

Speaking about the short term, persisting optimism may assist Brent prices in taking roots above the $65/bbl handle. However, this scenario can be confirmed only after the break of the 65.50 handle.

Previous forecast

18 February, 2019 16:38

← Short supply reports encourage oil market with prices soaring

The oil prices finished the previous week at the 3-month peaks, soaring above the $66/bbl handle. In total, the Brent oil quotes gained more than 6.5% over the past week and hit $66.40/bbl for the first time since late November. In the current environment, all the factors speak well for further strengthening of Brent oil. Nevertheless, any negative signs like a return of anti-risk sentiments, can depress already high quotes during the profit taking in the market.

Short supply reports encourage oil market with prices soaring

Next forecast

14 February, 2019 17:48

Euro touches multi-month bottom on Thursday →

The euro to US dollar exchange rate has touched a 3-month bottom on Thursday and even slightly regained positions afterwards. The rate was recorded at $1.1290. At the same time, the US dollar is getting support from increasing yield of 10Y state bonds and steady inflation reports in the USA. The second half of the week is full of economic reports. The USA will release retail sales results for December today. The figures can either improve slightly though may remain weak m-o-m.

Euro touches multi-month bottom on Thursday
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