Yesterday, WTI oil started depreciating again. On top of that, the price plunged below the $40/b bar for the first time in nearly 3 months. August 27, 2015 was the last time the price found itself that low, Masterforex-V Academy reports.
The break below the psychological level was seen around 16:45 GMT. This is the time when WTI oil cost $39.92/b. However, in a matter of 30 minutes the price managed to bounce back and regain a bit of the lost ground - $40.35/b. If to consider yesterday’s close, the price saw only a minor drop as compared to the previous close – just some $0,3/b – due to the recovery that followed the plunge.
As for Brent oil, it was trading at $43.42/b around that very time and later moved a little bit up to $43,59/b and closed the trading day around this level.
For now, we know that the market started the mentioned dive below the $40/b level amid a new report on the U.S. crude oil inventories. The report says that the country’s oil inventories expanded all the way up to 487,3 million barrels over the reported week. When take a look at the figures adjusted for seasonality, this is he highest level of oil inventories since 1930! He mentioned plunge was preceded by a similar price drop shown by the OPEC oil basket. This happened for the first time in 6 years. For those of you who doesn’t know, the OPEC basket represents the median price of the oil prices at which OPEC members export their oil (12 members). More often than not, the value is below oil futures prices.
Experts predict that with such a low level of oil prices, OPEC may see its oil proceeds drop from the average value of $1000 billion all the way down to $550 billion. If that’ the case, even Saudi Arabia, OPEC’s biggest exporter, will have to face a major budget deficit exceeding 20% GDP in 2015. At the same time, they say there is not going to be a sharp rally. If here is some price recovery in the international oil market, it is probably going to be gradual - a move up to just $80/b by 2020.
