Crude Oil Price Update: Recent Decline and Market Analysis
The price of a barrel of crude oil has fallen 1.6% since the start of Monday, with a total decline of 4% over the last two trading sessions. Factors contributing to this decline include signals from ceasefire talks between Israel and Lebanon reducing supply risks, and disappointment over the size of China’s stimulus package affecting expected demand.
Longer-term factors also include the continued upward trend in US oil inventories, with the strategic reserve increasing by 1.4 million barrels. Commercial inventories have been on the rise since the end of September, with oil producers adding at a record pace. Despite this, current inventory levels remain below the range of the past 5 years.
The markets are anticipating the Republican party’s political dominance to favor oil producers, but it is unlikely to lead to an increase in production. Technically, oil continues to be dominated by bears, with the price trading near the lower end of its range over the past three years.
Looking ahead, we will be monitoring price dynamics and OPEC+ comments closely, especially in the event of a pullback to $65-66. This could potentially bring the price back to $70-71, which seems to be an informal floor for major cartel members.
Natural Gas Price Update: Recent Spike and Market Analysis
On Monday, the US Natural Gas price rose more than 5% due to the temporary shutdown of gas production capacity in the Gulf of Mexico. Despite this, the US currently has the highest gas inventories in 4 years.
The price has returned to the $3.0 area, which has acted as pivot resistance multiple times this year. Given the inventory levels and oil dynamics, a new downtrend is more likely. However, a break of resistance could trigger a significant price increase.
The FxPro Analyst Team