Oil shortage fears fading away in the market

Posted 30 October, 2018

Oil prices decreased at a moderate pace during the Monday trading following the rebound recorded late last week. Brent oil failed to hit the 78 handle, and quotes fell below 77, which has been observed today as well.

The commodities market has to cope with several challenges at the beginning of this week. First of all, the USA keeps raising drilling activity, which indicates possible hikes of shale oil production.

Meanwhile, the market's fears of the supply shortage summoned by the upcoming US restrictions against Iran fade away gradually. Besides, one of the Iranian officials stated that oil export was unlikely to be below 1 million bbl per day after the sanctions came into force. It was reported earlier, that Saudi Arabia along with other OPEC states is ready to ramp up production to cover a lack of Iranian oil.

This week, the players seem to become more optimistic. Specifically, risk assets are on the rise now driven by Donald Trump's statements concerning the long-awaited trade deal with Beijing.

As a result, demand for the risk can rebound unless new negative reports appear in the world arena. This can lend a support to Brent upturn. However, the decline still can happen in this segment. Moreover, the price recovery above 80 seems hardly real so far.

Previous forecast

01 November, 2018 15:59

← Strong labour market report can support US dollar

The US dollar is losing grounds in the second half of the week, though ADP posted good enough labour market report. Earlier, traders used this report as a guideline for the outlook regarding the main report to be released on Friday. The private employment rate hiked by more than 200,000, which indicates that the US labour market in a good fettle now. However, fluctuations of the sentiments fueled US dollar weakening. Demand for the greenback as well as risk aversion activities slackened. Extra pressure on the US Dollar index came from the soaring sterling on the recent progress in the Brexit. Specifically, it was reported that the UK and EU representatives agreed that the UK financial companies will maintain access to the EU market after the divorce. In this situation, the sterling hit 1.29, with the euro follows to toe reaching 1.14.

Strong labour market report can support US dollar

Next forecast

30 October, 2018 15:27

Japanese yen can show rise later →

The US dollar is getting higher vs the yen this week. The rate is again close to the 113.00 handle, though customers become more careful approaching the psychological level, which means possible profit taking in the market. Investors have become more optimistic about the long-lasting US-China trade war, following recent Trump's message in which he expressed confidence in the agreement with the Chinese party. With this message, the market is naturally somewhat lifting in spirits especially given the previous statements. However, as the market analyst noted, Donald Trump is well known for his changing opinion. However, we should not forget that the US president was not sure that Beijing was ready for the deal. As a result, this is definitely not a progress with the risk to persist.

Japanese yen can show rise later
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