Oil moving up, right into a trap

World markets stalled near 2-month highs. The American S&p 500 has again been subjected to intense pressure after reached 2980. Bears with obvious zeal come into play every time on the way to the round level of 3000. This mark in 2019 made a serious resistance.

A similar situation exists in the gold market, which has stalled in 1750, experiencing problems with growth above multi-year resistance at 1800.

For one oil situation is more optimistic. Quotes of Brent crude continue to rise, reaching earlier in the morning $36.91, near the peak of April at $37.05.

Brent gained additional momentum on reports on stocks in the United States. Last week they fell by 5 million barrels, which was the second week of decline. Thus, the American strategic reserve continues to grow, an increase of 1.9 million barrels.

, Contrary to expectations, the stocks are unable to update the record 2017, starting a wave of cuts two weeks ago. It seems that a significant role was played by seasonality. The growth of this indicator often occurs in March-April, but then traditionally, there is a reduction: just in time for the beginning of active driving season. Now we see precisely this pattern, further enhanced with purchases of the strategic reserve.

Parallel decrease in production, but it happens much slower than you would expect. Last week was extracted on average 11.5 million barrels per day (-0.1 million per week). All in all, from the March peak reduction of around 1.6 million barrels per day, or slightly more than 12%.

The market clearly has a big buyer, who stores the oil somewhere outside the US. In normal times for fuel took up to 65% of «black gold», that is, more than 8.5 million barrels of produced 13.1 million in March. Demand fell by 40%, to about 5 million Assume that fuel, which is electricity remained unchanged, while consumption by industry decreased by 5% -10%. It turns out that the balance in the States is approximately at the level slightly above 9.2 million barrels per day. However, we see that even at 11.6-11.5 reserves are reduced.

This leads to the idea that the countries-consumers of raw materials do significantly increase the purchase of oil near cyclical lows. However, it is also bad news for the oil prospects. The overhang of inventory will interfere with the recovery of prices and suppress demand for raw materials in the coming months, as countries will reduce their reserves to average levels.

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Source: finversia.ru

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