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Brent: excess supply of oil in the world _12/09/2016

PCM Brokers

Technical analysis and trading recommendations https://fxpcm.com/en/fx/brent-excess-supply-oil-world-12092016

With the opening of the trading day on Monday, oil prices continued to fall. The November Brent crude on London's ICE Futures exchange fell by 1.90% to 47.1 dollars per barrel. Spot price for Brent crude dropped below the strong support level of 47.60 and was near the mark of 47.35 in the early European session. At the end of the European session continued decline to the support level 46.20.

After US oilfield services company Baker Hughes reported an increase in the number of active oil rigs in the reporting week (at 7414 units units), the price of oil fell on Friday at the end of the trading day. The number of drilling units in the United States is increasing during the last 11 of the 10 weeks. Only in the last three months, US companies have increased the number of drilling rigs in the unit 91, which is about 30% higher than the 9-month low reached in May. The productivity of wells is in this rising. The participants of the oil market are worried that the recent increase in oil prices causes an increasing number of producers of shale oil in the United States to return to drilling, despite the oversupply of oil in the world.

Some analysts of the oil market at a conference in Singapore last week, found that in the US shale oil producers face a break-even point at the level of the oil price of $ 40-60 per barrel. And while the price of oil will be below these values, the number of drilling rigs in the United States will increase, and this is a very negative factor for the oil market, where, and so the supply exceeds the demand.

Informal meeting of OPEC will be held later in September in Algeria. Expectations that the major producing countries in the world's oil agreed to freeze the current levels of oil production, as we approach the meeting weaken.

Applications chapter for the Federal Reserve Bank of Boston Eric Rosengren, who spoke late last week for a rate hike in the US, further contribute to the growth of the dollar and, consequently, lower prices for commodities, including oil

Source: https://fxpcm.com/en/fx/brent-excess-supply-oil-world-12092016
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