The global market of crude oil is currently pretty dynamic, with considerable price fluctuations. What factors affect the market? Which side to gain the upper hand in the near future - the bulls or the bears?
These questions are asked by millions of retail and institutional traders and investors around the globe. Many info sources try to find out the answers to these questions as well, including such respected editions as Die Welt (Germany).
The edition published an article revealing what the full American tanks of crude oil mean to the global oil market. In particular, the experts assume that the overall bias is still bearish, which means oil prices are going to drop further down in the near future.
It should be noted that many experts in commodity markets had expected the price to resume its way down. Now it seems to be the case as the predictions start manifesting themselves. According to the Commodity Trading Department of Masterforex-V Academy, the current bear market shown by crude oil is the result of an objective factor, i.e. the fact that major oil exporters around the globe reported higher oil inventories. Apparently, higher inventories amid declining consumption by oil importers lead to oversupply pushing the prices further down to new local lows.
U.S. crude oil inventories keep on expanding amid declining oil production triggered by the global economic slowdown. At the same time, oil prices are extremely low, which makes oil supply less beneficial for oil companies as they prefer to keep the extracted oil for better times with higher prices.
Moreover, U.S. oil reserves are nearing all-time highs and the tanks are nearly full. They say that in couple of weeks there will be no free oil storage. Apparently, this is a key point of concern for many experts. If the storage is down completely, oil prices are going to see further major lows.
After a short period of stable oil prices, the downtrend seems to have resumed again, Market Leader reports. Yesterday, WTI dropped below $43 per barrel.
The bear market started on last week when the price unexpectedly showed a sharp drop on Friday only to let the traders seen its continuations on Monday. Apparently, the key oil inventories reports that affected the price came from the USA and China.
According to Masterforex-V Academy, WTI is currently trading close to the 6-year low. Yesterday, the price started the week at 44,81 but managed to peak at 45 only to see a drop below 43 down to 42,85.
As for Brent oil, this guy is also going down amid the overall negative sentiment in the global market of crude oil. The trading week started at 54,60 and the price peaked at 54,99, which was followed by a drop to 52,66.
As we have just stated above, higher oil inventories are the key reasons why the prices are going down at the moment. At the same time, more and more experts are convinced that these oil inventories are going to grow in the near future since no oil producer is going to sell out their inventories at such low prices. Most likely, they are going to wait for better prices to make a bargain. At the same time, none of them has reported oil production cuts so far, which leads us to believe that oil inventories have no other option but to expand.
