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Oil Finally Closes the Gap

Olymp Trade

Brent crude oil quotes returned to $60.0 per barrel. Thus, the gap formed after the attack on Saudi Arabia oil facilities was closed exactly after 2 weeks of trading. It is very likely that the price decline will continue to the zone of $59.0-59.5, where consolidation or a small correctional movement will begin.

In the short term, there is no reason to wait for increasing oil prices. In the Middle East, there is a de-escalation of the conflict between Saudi Arabia and Yemen. The Wall Street Journal reports that Saudi leadership has agreed to a peace agreement between the Hussite Yemeni rebels. As a result, a ceasefire has been introduced in some areas of Yemen, which is likely to spread all over the country. This reduces the risk of interruptions in oil supplies from Saudi Arabia.

Also, the Crown Prince of Saudi Arabia commented on the drone attacks that occurred several weeks ago. According to him, the country's air defense did not repel the threat due to the huge coverage of the territory. An additional factor is that American missiles that are used for this are not designed to fight drones. The government intends to develop a new system of protection, which in the future may cause an increase in the cost of oil production.

In America, the number of active drilling rigs is declining. Over the last week, their number decreased by 6 to 713. This is the 6th decline in a row, as a result of which the data returned to the values ​​of spring 2017. In general, the downward trend has been continuing since the beginning of the year, during which time the number of rigs has decreased by more than 170 units.

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Source: https://olymptrade.com/
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