Oil prices continue to drift lower as market prices in potential strategic oil reserve releases. It is said that the United States, Japan, South Korea, India and China may release a total of 120 million barrels of oil to ease fuel prices for consumers. It is rumoured that SPR release may be announced during Biden's speech today (7:00 pm GMT) Meanwhile, OPEC+ members like Russia or Saudi Arabia stick to their narrative and say that demand drop at the turn of 2021 and 2022 looks highly likely, especially after European countries started to reimpose pandemic restrictions. As a result, OPEC warned that it may reconsider whether to continue with output increases at its next meeting. Release of strategic reserves will only have a short-term impact on the market. One should not forget that strategic reserves will need to be refilled so releasing them now will mean that countries will need to purchase more oil soon. On the other hand, should OPEC+ decide not to increase production, it may have a longer-lasting effect on prices.
A look at Brent chart (OIL) shows that oil price has dropped over 10% over the past month. OIL dropped to $77.30 yesterday in the afternoon and attempted to recover later on. However, advance was halted way ahead of the upper limit of the local market geometry. Unless we see a break above this hurdle in the $80 area, continuation of the downward move looks to be the base case scenario. The near-term support to watch can be found ranging around $77.00.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile app
Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
