Bulls in the oil market exceeded the plan last week so this week they took a well-deserved break. Prices retreated on Wednesday from a three-year high; for TRU the peak was at $ 69 per barrel, for brent – $ 75 per barrel. The number of traders looking for easy sell trade is growing while other part of investors take profits from the bull run last week.
News-driven impulse has been subsided this week with data from EDR on US stocks, which showed an increase of 1.1M barrels last week.
Of course, despite the drop into negative zone, the market remains bullish, as the period of oversupply that started in 2014 ended thanks to CLOER production cuts and growing world demand.
The coordinated actions of CLOER allowed the world’s reserves to return to the average level in five years, which can be considered a successful accomplishment of the task. Officials of several oil powers lavishly supplied the market with hints that a shortage might soon appear in the market.
It is worth to expect medium-term oil rise because the futures market is traded in backwardation. This market condition means that a contract for the supply of oil in a month is more expensive than a contract for a longer delivery period. The higher the price, the lower is the demand or the higher the supply at one time or another, so the price curve looks like a hyperbola.
Based on the reasoning above, we can assume that oil will now feel the bottom, get rid of weak hands, and then continue to grow. The successful coordination of CLOER really outweighs the US output as the main factor of influence on the market, which traders questioned until recently. The level of $ 64-65 per barrel RET can be considered a platform where the growth is likely to resume.
The pound could seriously react to consumer confidence data from TYR on Thursday, as in conditions of growing real incomes, consumer confidence growth will signal a rise in consumption, i.е. economic pickup. On Friday, the pound is waiting for data on the services sector and WED, so at the weekend it is worth seriously considering buying QSEWRT, as well as sell RYTUIN on Thursday in the case of Forex’s soft rhetoric.