The oil market is in rehabilitation mode

Арсений Дадашев, АУФИ 22 July 2021 12:31

Having gathered strength, oil sharply jumped in price at the auction on Wednesday, having won back most of the losses incurred at the beginning of the week. Brent not only managed to win back the level of $70 per barrel, but also exceeded the $72 mark, above which it was located during Thursday morning trading.

The technical rebound, combined with a further improvement in risk attitude, did their job, provoking an aggressive recovery of futures from two-month lows. It is noteworthy that the market allowed itself to ignore the ambiguous report of the US Department of Energy, which reflected the first increase in crude oil reserves since mid-May. The indicator increased by 2.1 million barrels against the API estimate, which was less than 1 million barrels.

The details of the report helped to ignore the resumption of growth in commercial stocks. Thus, reserves in Cushing fell by 1.4 million barrels, reaching the lowest value since January 2020 at 36.7 million barrels. Moreover, the stocks of gasoline and distillates decreased by 100 thousand barrels and 1.3 million barrels, respectively.

Judging by the positive dynamics in Asia and before the start of trading in Europe, investors are ready to continue buying risky assets, which means that during the day Brent has a chance to develop bullish momentum in the direction of $73 per barrel. However, the further rise may be uneven and accompanied by temporary pullbacks.

Arseniy Dadashev, Director of the Academy of Financial Management and Investment

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