OIL IS TRADED SLIGHTLY HIGHER, FOLLOWING THE DROP

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The USA oil prices grew insignificantly after the sharp drop during the morning trading session. Let us remind, that the US oil process have reached the lowest level during the last month. The main reason was the expectations of the global oil producers for the additional volumes of crude oil. This would compensate for the recent deficit and to lower the crude oil prices for crude oil.

The prices for light crude oil for August increased for 0.03% and ended up at 68.08 USD per one barrel. These prices were valid for the New York Mercantile Exchange. Brent crude, which is traded globally, has increased in price for 0.05% and ended up at the level of 72.16% per one barrel. And the prices for the US oil ended up with 67.03 USD per barrel, which is the lowest intraday during the last month.

Despite the USA sanctions on the Iranian oil, the major oil producers assured the investors and the major market players, that they will continue delivering oil to the market in the needed volumes, hence, providing the needed balance in the market.

Traders have already showed their attitudes to the news, they reduced selling crude oil and started giving slightly higher prices in comparison with the previous rates. Everybody is waiting for the US weekly inventory data, it might again to show one more decline. For example, the last report showed that the volumes have dropped for 13 mln barrels, which was the lowest value since February 2015.

The analysts, based on The Wall Street Journal survey, expect a new decline, this time for 3.3 mln barrel just during one-week period. But for now, the report has just to be released and the official data is still unknown.

A leader in this field, an industry group The American Petroleum Institute, announced, that its own data showed the crude oil supplies increase for as much as 425,000 barrels, but in gasoline stocks, and an increase for 1.7 mln barrels in distillate inventories.

However, the market isn’t calm, and investors and traders expect another significant drop in crude oil production and product stocks. For now, the crude oil prices continue falling, this time for 4%, and this is the second time during Monday, during the last four trading sessions.

The specialists still believe that the USA can open its oil reserves, based on the comments Donald Trump made last week, however, this is still not sure.

Tamas Varga, an analyst at Brokerage PVM Oil Associate Ltd, believes, that the main reason for the drop is the talk about those SPR release, and while the talk is getting louder, the prices are dropping. The SPR currently is about 270 million barrels above the required limit, so, if needed, there is room to act.

Saudi Arabia, from its side, is producing more crude oil that it was agreed, and this influences the prices for crude oil, as well. Let us remind, that OPEC countries (Saudi Arabia is the head of the union) agreed to increase the production of crude oil by up to 1 mln barrels per day. The decision came during the period when started outages of supply in Venezuela and risks from the side of Iranian supply, due to sanctions imposed by the USA.

So, the oil market is becoming increasingly dangerous, and the prices for crude oil rather unpredictable.

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