Oil benefits from risk appetite and supply pressures

Oil prices followed a second session of strong gains on Friday, thanks to a continued technical rebound, renewed risk appetite, a weaker dollar and supply fears.

The price of a barrel of Brent from the North Sea for delivery in November climbed 4.13%, to close at 92.84 dollars.

As for the barrel of American West Texas Intermediate (WTI), with maturity in October, it took 3.89%, to end at 86.79 dollars.

The confirmation of Thursday’s inflection “is mainly due to the return of risk appetite”, commented John Kilduff, of Again Capital.

This change in atmosphere caused the dollar, a safe haven, to decline, which benefited the price of black gold, whose exchanges are, for the most part, denominated in greenbacks.

The analyst also attributed the acceleration of crude to the message from the White House, which indicated that it did not plan to continue to draw heavily on strategic reserves after October, the horizon set so far.

The communication contradicted statements to Reuters by Energy Secretary Jennifer Granholm, who had mentioned a possible continuation of the program.

In one year, strategic stocks have shrunk by more than 178 million barrels, under the effect of US President Joe Biden’s decision to release them massively to relieve prices, and are at their lowest level for nearly 38 years. .

The end of the program would deprive the market of significant quantities of crude, the rate often reaching a million barrels per day since the launch, in the spring.

The prices were also based on the threat made on Wednesday by President Vladimir Putin to stop all deliveries of hydrocarbons to countries which would cap the prices of exported Russian oil, a project in preparation within the G7.

On a technical level, the price threshold reached on Wednesday, the lowest since January, “brought back bargain hunters” and encouraged bearish speculators to hedge their positions and buy back, explained John Kilduff.

The analyst expects to see this rebound run out of steam, as fears of a global recession remain and the wave of lockdowns in China “is very bad for fundamentals and demand”.

“There’s still real potential to go back down and test” recent lows, he said.

Leave a Comment

Your email address will not be published.