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Brent: price reduction risks _28/07/2016

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As already known, the Fed announced its decision to leave short-term interest rates unchanged at 0.5%, saying that "short-term risks to the economic outlook have decreased."

For a short time the dollar has appreciated sharply in the foreign exchange market after the Fed statement, as the text of the Fed statement could mean that a rate hike could come as early as September.

However, the Fed did not give a clear signal to raise interest rates this year. As a result, investors' mood changed, and the US dollar fell against most currencies, as of the Fed statement it should be that the regulator was not defined with their future plans regarding the US monetary policy.
Today, with the opening of the trading day the US dollar continues to decline against most currencies, however, the oil price also falls.
After the US Department of Energy announced yesterday an increase in US oil inventories at the storage tanks 1.671 million barrels instead of the expected reduction of 2.257 million barrels of oil quotes have collapsed to the level of 43.50 dollars per barrel of Brent crude oil.

Stocks in the US storages are redundant. Excess current level of inventory compared with the average value for similar date last 5 years is more than 30%. In the United States the size of oil reserves is located on the highs of the last 80 years, exceeding the amount of 500 million barrels.
The concern of investors in the world about excessive oil supply led to a reversal in prices after the rally, which lasted five months, during which in June had reached highs near USD 52.80 mark per barrel of Brent crude oil.

At the same time, despite the fears of investors, in the United States continues to increase the number of active drilling rigs. According to the latest report of the oilfield services company Baker Hughes, the number of active rigs in the US increased to 371 units, and the positive dynamics has been observed for the fourth consecutive week.

The continued uncertainty in the global economy against the backdrop of Brexit UK, also contribute to lower prices for commodities, including oil.
Thus, according to many analysts of the oil market, the probability of the movement in oil prices to 40 dollars per barrel increases.

Thursday, 28 Jul, 2016 / 9:54

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