Washington is escalating the situation in the oil market

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Arseniy Dadashev, AUFI 18 November 2021 12:29

After several days of consolidation, downside risks were realized in the oil market – during Wednesday's trading, Brent fell by more than 2.5%, reaching the lowest values since the first week of October. Today, futures continue to decline, marking around $79.60 during Asian trading. Futures are trying to reach the $80 mark, but the technical picture speaks in favor of new losses in the short term.

The trigger for the bearish breakthrough was reports that Washington, which had previously pressured OPEC to lower prices through a more aggressive increase in production, is trying to persuade China, Japan and India to release reserves in a coordinated manner in order to eliminate the deficit and lower oil prices. So far, all this is at the level of rumors, but even speculation turned out to be enough to push quotes out of a comfortable range, especially since the aforementioned importers express dissatisfaction with expensive oil.

Against this background, market participants ignored the bullish report of the US Department of Energy, which reflected a reduction in crude oil reserves last week by 2.1 million barrels. Gasoline and distillate stocks fell by 700 thousand and 800 thousand barrels, respectively, and production decreased by 100 thousand barrels per day, to 11.4 million.

Since the threat of a massive release of stocks is hanging over the market, and the price has violated the integrity of the psychological level of $80 for the first time since October 7, quotes may suffer deeper losses in limbo, and the sellers' immediate target shifts to the $78.50 zone.

Arseniy Dadashev, Director of the Academy of Financial Management and Investments

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