2016-08-04 12:20:42

The data released by the US Department of Energy on Wednesday showed that crude oil inventories in the country rose by 1.4 million barrels last week.
However, oil price has grown after this news, because last week gasoline inventories fell by 3.3 million barrels in the United States.
This was unexpected news for traders. As the excess of the gasoline stocks in the past few weeks had caused the decline in oil prices. The data on gasoline stocks has strong impact on oil prices lately.

Earlier this week, the price fell below $40 a barrel for the first time in the last three months. October contracts for crude oil Brent at ICE Futures fell to $41.80 per barrel. The lowest spot price of crude oil Brent was at the level of $41.50 per barrel this week. Since the beginning of June oil prices fell by more than 20%; the price of crude oil Brent was close to the level of the $50.30 per barrel. At the same time, oil reserves in the USA remain at record highs for the summer season.

Current excess of oil inventories is above 30% compared to the average level for the same period in the past 5 years. Oil reserves in the United States have reached the highest level over 80 years, above 500 million barrels.

There are concerns in the oil market that oil prices may reach $35 per barrel due to the facts that Libya is ready to return to the oil market and OPEC countries can increase oil production. In addition, many oil plants in USA and Asia are prepared to shut down production because of the seasonal maintenance. Slowdown of oil products production will lead to a further increase in oil reserves.

Increasing number of operating rigs in the USA put additional pressure on oil prices. According to the report of the oilfield services company “Baker Hughes”, the number of the rigs has increased up to 374 units. The rise in the number of rigs has been observed over past eight weeks. It is likely that the rise in the number of drilling rigs will continue, as the number of the existing drilling rigs in the USA is about 77% below the highest level that was recorded in October 2014.

Fed Atlanta President, Dennis Lockhart said on Monday that he did not rule out possibility of the interest rate increase at the next Fed meeting of the US Fed in September. If it happens, investment attractiveness of the USD will increase.
Therefore, fundamental factors are can cause the decline in oil prices.

Brent: Gazoline stocks fell last week. Fundamental analysis for 04.08.2016.