2016-07-01 11:58:01

Oil prices have won back losses sustained after the decision of the UK to leave the EU, which was announced last Friday. This news decreased investors’ risk appetite and increased their attention to safe-haven assets. However, this week, crude oil Brent rose by 3.8% and returned to the level of 50.00 USD per barrel.

Yesterday's statement of the head of the Bank of England (17:00 GMT+2) that in summer it is necessary to ease monetary policy in the UK, and that the Financial Policy Committee will adopt all necessary measures to maintain stability at the meeting next Tuesday, have provoked sharp rise in stock indices, especially the index of the London stock exchange FTSE100, and oil prices.

Mr. Carney promised to conduct weekly ILTR operations until September.

Later, oil prices have received support from a statement of the US Fed representative, James Bullard, who expects that GDP in the USA will grow by 2% in the next 2.5 years. Mr. Bullard also said that the rise in the USD caused by Brexit will be smoothed out due to the low long-term rates. Mr. Bullard also gave to understand that the US would adhere to softer monetary policy.

Now market participants incorporate in price at least one interest rate increase in the United States. Futures markets expectations of the decrease in interest rates in the USA in November have reached 17%. CME Group shows that market expectation of the decrease in interest rates in the USA by December is only 5%.

However, uncertainty about possible effect of Brexit on the global economy may have adverse impact on demand for oil and oil prices.

Saudi Arabia has lowered official selling prices of oil (OSP) for August for the United States, countries of the Mediterranean region and Asia.

Recent rise in the number of operating drilling rigs in the, possibility of production of shale oil in the USA, continuing oversupply of oil in the world, the level of the US oil inventories, which are still at the historical highs of 500 million barrels and increasing risks for European and world economies associated with Brexit are the main negative factors for the oil market at the moment.

Brent: the price has regained after Brexit  01/07/2016. Fundamental analysis