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Oil falls again: cuts by OPEC is not enough to maintain balance in the market

Oil falls a second day because of fears of the International energy Agency that OPEC cuts and the allies have a major impact on market supply.

As the reduction in oil production affects the market

Reduction, which the organization announced last week, can balance the market for some time, but saturation in the long term to avoid is unlikely. OPEC, apparently, will be forced to make even greater reductions in the second half of 2019.

“The market is trying to stand amid all these uncertainties”, — says Norbert Rucker, head of macroeconomic and commodity analysis at Julius Baer Group Ltd.

The oil market remains in a bearish trend since October, when rates reached a peak in 4 years. The current trend, as you know, due to fears about supply and demand in the next year: the balance between them shifts in favor of the proposal. Faster growing share of States in this market: it is expected that by 2019 the world’s largest economy will produce 12 million barrels a day, which will only aggravate the current situation. Significant impact on prices caused the weakening of the us sanctions against Iran and importers of its oil. At the same time, OPEC’s integrity remains in question, for differences of opinion among member States is becoming more.

Dynamics of futures

The January futures for WTI has fallen in price by 57 cents to $of 50.58 per barrel. Had seen a small correction of up to eight cents, after statistics were published on the oil reserves of the United States: they declined slightly and is likely to continue to decline. Total trading volume was 37 percent higher than the 100-day average.

Brent futures for February fell 51 cents to $59,64 per barrel. World mark still on $of 8.82 more expensive than the us.

If we talk about the reserves of the United States, then last week they fell by 1.21 million barrels per day. However, it was assumed that they will fall to 10.2 million barrels. This incorrect forecast has only strengthened the current trend. But it is worth noting that the current inventory (442 million barrels) is still above the average over the past five years.

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