Stock Market: A supply shortage in the oil market is pushing up price
Worries about a supply shortage in the market lifted oil prices on the charts on Friday. As a result, the highs since October 11 are being confidently updated. Brent crude futures jumped 3.45% to $97.94 a barrel. WTI crude futures rose 4.12% to $91.75 a barrel.
If you follow the news in the markets, you can see how volatile they have become today. The current situation can be used to make money in stock and forex trading. The main thing is to properly analyze the news agenda and make the right decisions. But also remember that it’s important to trade with a licensed company. Use only the top best brokers in the world to trade on price fluctuations in commodity markets.
What’s happening in the market?
The U.S. Department of Energy’s report on the reduction of commercial oil reserves in the country last week contributed to the growth in quotations of both types of crude oil.
- According to the report, U.S. commercial oil reserves decreased by 3.12mb, to 436.83mb last week.
- Meanwhile, gasoline stocks decreased by 1.26 million barrels to 206.63 million.
Analysts expected crude stocks to go down only by 200 thousand barrels; gasoline stocks – by 1 million barrels.
Oil prices went up despite the announcement of the Fed’s interest rate hike of 75 basis points, which eventually brought it to 4% per year; that is, to its highest level since January 2008. Even Jerome Powell’s certainty that they are not going to switch over to policy easing in the United States at the moment does not prevent the quotations of black gold from overcoming high levels. By the way, Powell made it clear to the market that the final level of interest rates in the U.S. may be even higher than investors expected.
The dollar, as expected, on the background of hawkish comments by Fed officials, perked up. And a strong dollar, as you know, makes oil denominated in U.S. currency more expensive for holders of other currencies. And accordingly, it is less attractive for investment.
The dollar index is down 0.43% to 112.32. Nonetheless, the flagship of the currency market is preparing to finish its most successful week of the month. But while the dollar is strengthening, Meta has lost $80 billion. Stock prices of other tech giants are also falling.
Meanwhile, the G7 countries (Great Britain, Germany, Italy, the USA, Canada, France and Japan) and Australia agreed on November 3 to introduce a fixed price for oil from Russia. The initial price is still not set, but it is to be announced in the coming weeks. The G7 countries agreed to revise this fixed price as necessary.
What can we expect in the future?
Today, the focus for traders is on U.S. labor market data, as the Nonfarm payrolls report is expected. The U.S. economy was projected to create 200,000 jobs last month. If it comes below that number, the pressure on the dollar could remain till the end of the trading day, which would additionally support oil prices and help it stay in the green zone. And oil of the benchmark Brent brand has enough reasons to confidently maintain the growth potential and even reach the level of $100 per barrel.