Oil price down significantly – the overall picture after the attacks on the Saudis

The price of oil is falling. What is the reason? First of all a very short review of the last week to get an understanding of the overall picture. The last week in the big picture was dominated by the fact that the market was able to calm down because the Saudis apparently very quickly increased their oil production to the old level of two weeks ago, i.e. to the level before the attacks on their oil plants. This easing, that there is probably no shortage of supply after all, caused the oil price to drop by 3 Dollars last week to 56 Dollars in WTI oil on Friday evening.

Photo: pixabay / ptra

Oil price continues to fall

And since yesterday morning at the start of the new week, the oil price has fallen further, from 56 to up to 54 Dollars in WTI oil (currently 54.29 Dollars). What is important for the psychology of the oil market is that at 55 Dollars the gap was closed, i.e. the large gap that arose immediately after the attacks on Saudi oil assets. This gap and its closure is clearly visible in the following chart, which goes back to 12th of September. This gap was finally closed yesterday evening.

Reasons for the current relaxation

The significant decline in the oil price therefore means that the market is easing! And this despite the fact that new attacks on oil plants in Saudi Arabia, UAE or Kuwait can occur at any time. Who knows? The situation remains unclear, but at the moment it seems more like a ceasefire for the Houthis. But that’s obviously not what you’re thinking at the moment. According to yesterday’s reports, the Saudis have now finally brought their production and capacity up to the old levels of before the attacks. This has caused the market to fall further yesterday, after the ongoing easing last week.

According to surveys, OPEC’s production fell noticeably in September, which was of course to be expected as a result of the attacks on the Saudis. There are also current reports that production volumes in the USA and Russia have fallen slightly. But all this has brought up the oil price from yesterday to today just by 28 cents. In the large picture of the last two weeks this is not a rise worth mentioning. No, the oil market is at least now in “relaxation mode”. We are simply glad and happy that the Saudis are able to repair their systems so quickly. This info floats relaxing over the oil market.

Tonight at 10:30 p.m. the privately determined API inventories of crude oil in the U.S. will arrive. Tomorrow at 4:30 p.m. the official data will arrive. We can be curious whether they give a new impulse or whether they strengthen the oil price in the current trend. Of course, we must not forget that the current economic slowdown and Donald Trump’s tweets in trade war support the weakening of the oil price. But let’s wait and see. Will there be a little candy from Donald in the direction of China in the near future? The oil price then might jump up 1 Dollar again.

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