2016-07-28 12:19:11

Yesterday, US department of Energy reported the rise in oil stocks in the US terminals by 1.671 million barrels against expectation of the decline by 2.257 million barrels. Following this news the price of crude oil Brent fell to the level of 43.50 USD per barrel.

Later, at 20:00 (GMT+2) US Fed announced its interest rate decision. It was decided to leave short-term interest rates at the previous level of 0.5%, on the ground that short-term risks for economic growth had reduced.

For a short time, the USD sharply went up on the hope that the interest rates would be raised in September.
However, the Fed did not clearly specify that the rates would be raised this year and investors’ sentiments have changed causing the decline in the USD against major currencies. It seems that the Regulator has not yet determined future monetary policy plans in the country.

Today with the opening of the trading day, the US dollar has continued to decline against major currencies. At the same time oil prices also go down. U.S. terminals are oversupplied with oil. Current excess of oil has reached 30% compared with the average value for the same period over the past 5 years. The stock of oil in the USA reached the highs in the past 80 years, exceeding the level of 500 million barrels.

Investors’ concerns about the excessive supply of oil in the world has led to the price reversal after the rally of the past five months, the highest level at the level of $52.80 per barrel of Brent crude oil was reached in June.

Despite investors’ concerns, the USA continues to increase the number of drilling rigs. According to a report of Baker Hughes, an oilfield services company, the number of operating rigs in the USA rose to 371 units. Their number has been increasing for the fourth consecutive week.

Continuing uncertainty in the global economy after Brexit has also contributed to the decline in the commodity prices, including oil.

Some analysts believe that oil prices can go down to $40 per barrel.

Brent: stocks of oil in the US terminals have increased. Fundamental analysis for 28.07.2016.