Traders saw signs of a bottom in the oil market


Stock prices for oil grow for the fifth consecutive day, their growth is not stopped even released statistics that showed another increase in crude stocks in the United States. During today’s trading on the stock exchange ICE cost of a barrel of Brent rose to $37,83 – so-expensive Brent was not worth 4 January 2016.

Experts surveyed by the Financial Times see an increase in the price is a reaffirmation of the fact that large market players believe that the bottom in oil prices, finally passed and bet on the reversal of quotes to upwards. Earlier it was reported that by 23 February (the latest available statistics ICE) the number of long positions opened by investors, who expect rising prices, outnumbered short by more than 320 thousand tons – an absolute record since the start of the statistics, i.e. since 2011.

The possibility of resumption of sustained growth in oil prices FT associates with the willingness of some of the largest oil-producing countries to freeze production at the level of January 2016, and the first clear evidence of slowdown in production from shale deposits in the USA. For the first time a significant reduction in the volumes of extracted oil here was recorded at the end of December 2015 and February 2016, the number of drilling rigs in the U.S. fell to the lowest level in more than six years.

“The decline in oil and gas industry in the US has accelerated in 2016. Production volumes are falling and will fall over a long period of time,” said commodity analyst Standard Chartered Half Horsnell.

However, respondents FT analysts do not believe that in the commodities market really have developed the necessary conditions for the resumption of growth of prices. In particular, analysts of investment Bank Macquarie believe that bet on the rise of quotations of hedge funds may return to the strategy of sales, if the expected rally in the oil market will not happen.

In turn, the head of commodity markets Department in London branch of Société Générale Jonathan Whitehead warns that if the price of a barrel will increase by a few dollars on the market immediately can return earlier left the producers of shale oil. The experts also questioned the possibility of a rally in the oil market, in conditions when the storage of crude oil almost filled to capacity.

According to the energy information Administration at the U.S. Department of energy (EIA), the volume of crude oil reserves in the U.S. for the week from 19 to 26 February 2016 increased by 10.4 million barrels and reached the highest since 1930. While the stocks of oil in Cushing, the main U.S. commodity hub, exceeded $ 66 million barrels, nearly six times more than were kept here in spring 2004. Total storage volume in this case is estimated at about 73 million barrels.