Crude oil prices sank amid decline in demand for hydrocarbon
Crude oil prices have moved into the negative zone and are gradually declining this morning. This is amid the serious decline in the demand for hydrocarbons in the United States of America. This is typical not only for the American market, however market participants are particularly worried about the consumption of oil in the United States.
Even quite positive statistics from the US Department of Energy could not stop the falling prices in the raw materials market. According to the data, the level of black gold reserves in the country reduced by 3.25 million barrels last week, which ended January 8. Despite such a good result, investors still remained concerned that demand in the state began to undergo a significant negative correction. The level of gasoline reserves in the United States, by contrast, increased by 4.39 million barrels, and distillates went up by 4.79 million barrels.
In general, there is still a trend of low demand for fuel in the state, which is openly stated by representatives of the US Department of Energy. Moreover, according to similar departments in other regions, particularly in Europe, demand is also weakening rather than increasing its position. For example, with the introduction of strict quarantine measures in the UK, there was a reduction in car traffic, which today become less by 42%. Naturally, the level of fuel consumption also fell rapidly, as well as the demand for hydrocarbons. However, there are some positive aspects, which can be attributed to a significant increase in the air transportation sector, which allows us to hope that the raw materials market will still cope with the current difficulties.
Even in conditions of limited demand, market participants will continue to show a “bullish” attitude. The reason for this is the expectation of a new project on the fiscal stimulus of the US economy, which will be presented by US President-elect Joe Biden. In his opinion, the infusions that the authorities were able to agree on earlier are not enough for the economy to move to recovery at a faster pace.
In addition, the first results concerning the use of a vaccine against coronavirus infection have also appeared. As it became known after the tests, the drug developed by Johnson & Johnson, causes the formation of a stable immunity to the virus, which indicates that attempts to stop mass infection were due to good reason.
Thus, there are plenty of positive factors for the growth of oil prices on the market, and the negative trend can continue only if the US dollar begins to significantly and immediately increase its rate. However, there are no visible reasons for this either, which means that the oil market may be preparing for another wave of growth, which is not far off.
Although there is still something to think about. The level of crude oil imports in China in the last month of 2020 significantly decreased and even reached its lowest levels in almost three years which forced it back to 9.096 million barrels per day.
The price of futures contracts for Brent crude oil for delivery in March on the trading floor in London decreased by 0.29% or $0.16, to $55.9 per barrel. Yesterday’s trading also ended with a decline of 0.9% or $0.52, and the final price was $56.06 per barrel.
The price of futures contracts for WTI crude oil for delivery in February on the electronic trading platform in New York fell by 0.15% or $0.08, to $52.83 per barrel. Yesterday’s trading was also not very successful: contracts fell by 0.6% or $0.3, to $52.91 per barrel.
The material has been provided by InstaForex Company – www.instaforex.com