Crude oil futures showed another rally after the US revealed a decline in its oil inventories. This was an additional factor pushing oil prices up amid the unstable situation in the Middle East, the world’s major oil-exporting region. The prices went 1,5% up.
What was the price behavior in July? What factors influenced the situation? What to expect in the near future? will help us to clarify the situation.
Calm Before The Storm?
The global market of crude oil entered the second half of the year relatively stable. The WTI futures traded around $84,00-85,61/b. However, on July 4th, the market felt the pressure caused by the situation in Syria. The European oil embargo on the export of crude oil from Iran, which took effect on July 1st, also contributed to the overall uncertainty.
The market panic pushed the prices from $84,03/b up to $88,01/b. However, the price suspended its growth shortly after the start. Therefore, on July 17th, the price was mowing within the 84,06-87,97 range.
Another rally was seen on July 18th. This time the price gained $3.52/b, thus reaching $93,2/b. However, July ended with a 5.4% decline, disappointing the bulls.
Therefore, we can conclude that the oil market was relatively stable throughout July, with minor ups and downs. In early August, the market was clam and waiting for drivers to go volatile. Mario Draghi’s speech was the first to drive the market. After he reported that the ECB wasn’t going to stimulate the domestic market, the price dropped from $89,3/b down to $87,4/b on august 2nd. A day later, the following 2 events supported the bulls:
· The Federal Reserve confirmed its intension to leave the refinancing interest rate unchanged at 0-0,25% till 2014.
· The US oil inventories shrank by 11.6 million barrels.
Trading Crude Oil: Factors To Consider
The markets of crude oil and natural gas are still trying to get over the recent technological breakthrough. The shale drilling technologies allowed the humanity to get cheaper energy sources. The US seems to be playing first fiddle despite its 6% share in the market. Therefore, the following factors will influence the mid-term pricing:
· US oil inventories
· US oil demand
· Weather
· Situation in financial markets
· Situation in the Middle East
· Post-crisis recovery
At this point, the bullish scenario looks more portable.
