Forex Analysis & Reviews: 26.01.2021 - Falling into the abyss: oil...

Live Chat

InstaForex Loprais Team - Official participant of the Dakar rally

This section features the most important information about trading with InstaForex. We provide both analysis from leading experts for experienced traders and articles on trading conditions for beginners. Our services will help increase your profit potential.

Become Trader

Account Opening

See also

Trading Conditions

Forex Analytics

Charts

This section is designed for those who are just starting their trading journey. InstaForex educational and analytical materials will meet your training needs. Our experts' recommendations will make your first steps to trading success simple and clear.

Start as Beginner

How to start trading

Useful information

Training and recordings

InstaForex innovative services are an essential element of productive investment. We strive to provide our clients with advanced technical capabilities and make their trading routine comfortable as we are recognized as the best broker in this regard.

Become Investor

PAMM System

ForexCopy System

Passive investments

OYS account

Partnership with InstaForex is beneficial and top-tier. Join our affiliate programs and enjoy bonuses, partner rewards, and the possibility to travel with the team of the world-renowned brand.

Become Partner

Main Page

Partner Area

Advantages for Affiliates

Registration

This section contains the most lucrative offers from InstaForex. Receive bonuses when topping up an account, compete with other traders, and get real prizes even when trading in a demo account.

All Promo Campaigns

Bonuses

Contests

Events

Holidays with InstaForex are not only pleasant but also useful. We offer a one-stop portal, numerous forums, and corporate blogs, where traders can exchange experiences and become successfully integrated into the Forex community.

Full details

Forums

We are in social networks

Forex humour

Forex Portal

InstaForex is an international brand created in 2007. The company provides services for online FX trading and is recognized as one of the world's leading brokers. We have won the trust of more than 7,000,000 retail traders, who have already appreciated our reliability and focus on innovations.

Learn More

History

Why Choose Us

InstaSport

Regulation

Company News

Awards

InstaForex Stars

InstaForex Offline

Headquarters

Key documents

Social Responsibility

InstaForex - Official partner of Dragon Racing

26.01.2021 11:31 AM

Falling into the abyss: oil has big problems ahead

Crude oil prices resumed negative dynamics on Tuesday morning amid a strained situation with the level of demand for black gold, which is limited against the background of the ongoing coronavirus pandemic and the rapid growth of infection. The problems associated with the long-awaited mass vaccination, namely the fact that it is going too slowly, only exacerbates the whole picture.

A new wave of coronavirus infection in China is adding fuel to the fire, which is now becoming almost obvious and inevitable, although the authorities are making every effort to rectify the situation. All this is already exerting serious negative pressure on the crude oil market, where demand is declining. Recall that China is one of the largest importers of oil in the world, and the level of consumption of raw materials during the celebration of the Lunar New Year traditionally grows. However, this year, the Chinese government seems to have no choice but to introduce the most stringent restrictive measures on the movement of citizens of the country so as not to repeat the scale of infection that was recorded last winter and spring. The national government is already actively encouraging people to stay at home and postpone their traditional travel to visit relatives. On the one hand, this can have a positive effect in the future, as severe consequences of infection can be avoided, and, consequently, the demand for raw materials will recover faster. On the other hand, the situation on the global black gold market will worsen significantly.

The price of futures contracts for Brent crude oil for delivery in March on the trading floor in London sank 0.68% or $0.38, to $55.5 per barrel. Monday's trading session ended with an increase of 0.9% or $0.47, which sent the final price at $55.88 per barrel. However, as a new day dawned, the problems returned.

The price of futures contracts for WTI crude oil for delivery in March on the electronic trading floor in New York fell 0.63% or $0.33, to $52.44 per barrel. Monday's session ended in the green zone with an increase of 1% or $0.5, sending the final price at $52.77 per barrel.

Seasonal tourist trips in China on the occasion of the celebration of the Lunar New Year should start very soon – on January 28. However, this year looks like it will be special. According to preliminary estimates of analysts, the total number of trips may decrease by at least 40% compared to the same indicator in 2019 and reach only 1.7 billion. This figure is 15% less than the one recorded last year.

The main problem for market participants now is connected with the fact that all the consequences of the travel restrictions imposed in China on the overall level of consumption of crude oil are still unclear. Nevertheless, there are already clearly visible signals indicating that the relationship between supply and demand for black gold is clearly not on the side of the latter. However, some attempts to support the oil supply market also exist, which is good news.

In particular, the Russian oil company, Urals, has already announced that it is going to cut its supplies in February by 2.2 million tons, which is 29% less than the level that was in the first month of 2021. Also, Iraq expressed its desire to reduce its production in the first months of 2021 to compensate for the shortage that was accumulated under the agreement with OPEC signed last year.

One way or another, all these measures may not be enough for the oil market to avoid serious problems soon. In this regard, no expert can yet judge the medium and long-term prospects of its development.

You have already liked this post today

*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.