Wednesday started with positive news on the crude oil market. The cost is growing at a furious pace, which has already allowed it to reach the highest values of the last week. The reason for the positivity was the data from China regarding the economic growth and increase in demand for hydrocarbons, the confirmation of which the market participants have been waiting for so long.
In the meantime, when one of the uncertainties became clearer, traders sigh with relief and wait for the new portion of the statistics on crude oil reserves in the United States, which, however, may shake the emerging confidence in oil.
The value of Brent crude futures contracts for May delivery rose 0.6% or $0.5 at once, to reach $83.95 per barrel in London this morning. The previous trading session was also not bad, with the brand registering a 17% or $1.41 increase, which put it within $83.45 per barrel. Particularly important now is the fact that the positivity has not disappeared, and continues to support the price.
The price of WTI light crude oil futures contracts with delivery in April is also growing today on the electronic trading platform in New York. The rise has already amounted to 0.62%, or $0.48, and the price has moved to $77.53 per barrel. Yesterday's rise was very tangible, with the brand managing to gain 1.8%, or $1.37, in trading, which put it within $77.05 a barrel. This made it possible to win back almost all losses of the previous days.
On the whole, in the second month of the current year oil raw materials did not feel too confident. During the whole period there were fluctuations in the value, which eventually led to a decrease in the price in the reporting period. Thus, Brent lost 0.7% of its previous value in February. WTI dropped much more seriously, its February fall amounted to 2.3%.
The main impetus for the growth was macro data from China. Recall that market participants have long been following the situation in the Chinese economy, waiting for confirmation of their assumptions about significant growth, which became possible after the lifting of major restrictions on the coronavirus infection. In this case, it is almost safe to say that the forecast has come true.
According to the latest data, China's manufacturing PMI increased by more than 2 points in the second month of this year. It moved from 50.1 points to 52.6 points. This was a complete surprise to analysts, who had spoken about a very moderate increase to no more than 50.5 points. The indicators, which exceeded the expectations, could not help encouraging the raw materials market, which received a confident signal for growth.
Another key indicator, the services PMI, was also significantly higher than its previous value. The index rose 1.9 points, which moved the index from 54.4 points to 56.3 points. This was the new maximum value for the last two years.
Recall that the level of the indicator, exceeding the mark of 50 points, is evidence of sustained growth in business activity of the sector. The value of less than 50 points indicates the fading of interest.
The news on the monetary policy of the United States was a negative pressure on the oil market. Most analysts were inclined to believe that an increase in the prime rate was inevitable. And the main regulator of the country, the Fed, did not deny it. The only question was how serious this increase would be. Essentially, the Federal Reserve was caught between two fires. On the one hand there are incredibly high inflation risks, and on the other - support for the national currency. It is not clear how to choose the golden mean here.
Another situation, which worries oil market participants as much as the regulator's actions, concerns indicators of growth of raw materials reserves in the United States. Yesterday the analysts published preliminary data, according to which we should expect growth of about 6.2 million barrels by the end of last week.
The official statistics will be presented to the public only tonight. However, it is already expected to indicate an increase by 500,000 barrels. This may put significant pressure on hydrocarbon prices, which will affect the change of trend in the market.
The confrontation between the two global trends - economic growth in China and increase in crude oil reserves in the U.S. - may act as a deterrent to the market for a while. However, it is obvious that the first trend is much stronger than the second, so if the oil prices start to fall, it will look more like a correction to the negative, rather than a prolonged trend.
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