Reasons to buy oil - now or never.
31 / May / 21 Visitors: 54 ★★★★★
Brent crude ended the trading session on Thursday with a decline, sagging to $ 61.65 per barrel. The pressure on the quotes was exerted by fears for the prospects for a global economic recovery against the backdrop of an increase in the number of cases of COVID-19 in many countries of the world. First of all, we are talking about European countries such as France, Germany and Italy, where the third wave of coronavirus infection was previously recorded, forcing the governments of these regions to re-introduce restrictive measures. The number of new COVID cases is on the rise in key emerging economies such as India and Brazil. India reported 47,262 new cases of coronavirus and 275 deaths on Wednesday. The daily increase in the number of cases was the strongest this year. The incidence in Brazil is also on the rise. In addition, Brazil became the second country where the number of deaths from coronavirus exceeded 300 thousand.
Despite the above news background, today oil prices are traded in positive territory near $ 63 per barrel, adding 0.8% since the opening of the day. Traders' focus remains on the Suez Canal incident, where a giant container ship ran aground on Wednesday, blocking it completely. According to Bloomberg, the channel will be released on Sunday or Monday at peak tide. Until then, passage through the channel will be impossible. According to some estimates, ships carrying up to 15 million barrels of oil were affected by the incident in the Suez Canal. Given the scale of the congestion, as well as the strategic importance of the Suez Canal in oil transit, we are talking about disrupting global supplies of hydrocarbons.
Reports of the Suez Canal situation distracted traders' attention from the Energy Information Administration's (EIA) weekly inventory data released Wednesday. EIA announced an increase in oil reserves in the country in the week of March 13-19 by 1.9 million barrels. Thus, US oil inventories rose for five consecutive weeks.
The OPEC + meeting will take place next week. Market participants believe that as a result of the deterioration in the global economic environment due to new lockdowns, the OPEC + countries will prefer to refrain from additional growth in oil production, which could potentially become the next catalyst for price increases. Recall that a similar decision by OPEC + at the last meeting led to an increase in prices by more than 5%. Considering the above, the priority remains with "long" positions on Brent crude oil.
Brent BuyStop 63.20 TP 66.10 SL 62.50