The price of WTI oil fell to the level of 71.3 dollars per barrel.
Investors are assessing the balance of supply and demand in the conditions of the spread of the coronavirus, while uncertainty is growing on the world market. Traders estimate ambiguous factors affecting the price of oil. On the one hand, the pandemic poses a threat to demand, on the other-the economy continues to recover, as evidenced by data around the world and financial reports of major companies. The market has overcome a sharp correction down to $ 65 and is now trying to break above the level of $ 72 per barrel.
Last week, hedge funds sold contracts for 58 million barrels of Brent and 56.7 million barrels of WTI grade. As a result, the net long position in contracts for American oil fell by 64.6 million barrels. The sale was the highest since July 2018 and one of the largest in terms of scale in 8 years of available statistics. At the same time, the ratio of long positions to short positions fell from 6 to 1 to 4.5 to 1. The sale took place in a week that was the worst for the oil market in almost a year, after the OPEC+ countries decided to ease production quotas in 2022.
From the point of view of the balance of supply and demand, the oil market remains in deficit. According to OPEC estimates, consumption exceeds production by 2 million barrels per day. But speculative investors are much more concerned about the reversal in the policy of the US Federal Reserve, which is beginning to discuss the curtailment of the asset repurchase program.
In our forecast, we expect an increase in the price of WTI oil to the resistance levels of 71.5, 71.7 and 72 dollars per barrel.