FXTM information and reviews
OctaFX information and reviews
FXCC information and reviews
Libertex information and reviews
FxPro information and reviews
HotForex information and reviews

Oil continues to correct the rise of the previous 12 months

23 November 2021

Oil is adding around 1% on Monday after posting the 4th week of back-to-back decline, during which WTI lost almost 12%, and Brent nearly 11%. Nevertheless, the US and oil-consuming countries continue to put verbal pressure on quotations, discussing the possibility of selling off strategic stocks to bring down the price. These media reports put pressure on quotations because of speculation that the USA, China, India, and Japan – the biggest oil importers – could bring prices down in the short term by overly decisive actions.

Additionally, a jump in coronavirus cases in Europe, leading to stricter lockdowns and undermining demand, is taking away the support for Crude. In parallel to this, OPEC+, albeit too slow (according to importing countries), is still increasing production quotas.

The momentum of the correction after a year-long rally may not attract significant buyers demand until a drop to $75 for Brent in a moderately negative scenario and $67 in a sharp rebalancing towards surplus. For WTI, the $73 area (2018 highs) and $65 (round level and 2019 peak area) act as meaningful reference points. However, the global trend in oil is still on the bullish side if we look beyond the medium-term fluctuations.

In the USA itself, the recovery in drilling activity has been notably slower than since the “bottom” in 2009 and 2016. In contrast to the price shock in 2014-15, the collapse in quotations in 2020 coincided with the so-called energy transition. The focus of investors and policymakers in developed countries has shifted to alternative energy sources.

While we have seen a steady increase of 150% in the number of rigs in the US since last September, production has risen by 4% as most of the new rigs compensate for depleted wells. It is also possible that some of the rigs are being made redundant and, it may take up to 2 years until the rate of production growth increases in any notable way.

In the longer term, we see more supply and demand contraction risks for oil, which is harmful to revenues and share prices of oil producers. That said, oil prices may well remain at high levels for many more years until alternative energy becomes more efficient and reliable.




Stock Futures Recover Losses, Here Is Why
Stock Futures Recover Losses, Here Is Why

The US and European futures are trading higher today as most of the stock indices are sending an oversold signal, which has brought some bargain hunters into the market...

21 Jan 2022

Oil prices rocketing
Oil prices rocketing

An outage on a pipeline from Iraq to Turkey has supported the recent increase in oil prices. Turkey’s pipeline operator said it extinguished the flames following...

20 Jan 2022

Signs of slowing UK inflation
Signs of slowing UK inflation

Consumer inflation in Britain continues to accelerate, but producer prices show the first signs of cooling. CPI rose to 5.4 y/y in December, with a 0.5% monthly increase after...

20 Jan 2022

American and European futures are trading lower today
American and European futures are trading lower today

The tone set by the US banks on Friday has created pessimism among traders and this is influencing the price action in the US and Europe. Moving forward...

19 Jan 2022

Metaverse: The next chapter for investing or a temporary hype?
Metaverse: The next chapter for investing or a temporary hype?

2021 saw plenty of innovations come to the mainstream, but the metaverse indisputably hit the home run. Originally coined by Neal Stephenson in his 1992 sci-fi novel Snow Crash...

18 Jan 2022

Fed Hawkish Policy Leads to Slip of Asian Shares
Fed Hawkish Policy Leads to Slip of Asian Shares

On Friday, Asian stocks plummeted as a new round of hawkish statements from Federal Reserve officials bolstered predictions that interest rates in the United States...

17 Jan 2022

Editors' Picks

XM information and reviews
FXCM information and reviews
AvaTrade information and reviews
LegacyFX information and reviews
FP Markets information and reviews
FP Markets
Pepperstone information and reviews

© 2006-2022 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.