In early June, the global market of crude oil started stabilizing. After a major downswing in May, the WTI oil price entered the 81,71-86,48 range and has been fluctuating in it ever since. Other sorts of crude oil are fluctuation within a price range as well.
How did the market behaved in May - early June? What were the reasons for that? What to expect in the future? Masterforex-V Academy will help us to answer these questions.
Crude Oil: May’s Outlook
The bears dominated the market throughout May. Form May 3rd through 8th, crude oil depreciated by 8.5% thus reaching $97,31-98,06/b and losing $7.5per each barrel. The decline resulted from 2 major events: Mario Draghi’s comments on risks in the global economy and the US EIA’s report on higher US oil stocks (+0.8%).
The bearish tendency continued as several fundamental factors went on pressing the prices, including Forex instability, poorer economic performance in the USA, a 1.8% decline in the eurozone’s manufacturing production, the eurozone crisis, The G8’s intension to support alternative energy etc. To make the long story short, oil got 20% cheaper in May.
Price Smoothing: What Makes Oil Prices Go Flattish?
Entering the market, most traders and investors didn’t expect the market to reach the bottom inside the $ 83,12-86,48/b price range. However, later it became clear that the “black gold” is not going to depreciate any further.
During the first week of June, oil prices recovered a little but failed to initiate a rally. On June 19th, crude oil established a price range within $ 81,71-86,48/b. What factors support oil prices?
·The strengthening of the US Dollar against other majors.
·The reduction of oil production quotas by the OPEC.
In the short run, the situation around Iran will be the dominating factor for the global market of crude oil. Moreover, the EU summit is to take place on June 28th-29th. As for mid- and long-term perspective, the overall situation will most likely be dictated by lower demand and controlled production growth. If this is the case, we will definitely see another bearish trend.
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