The WTI crude oil traded successfully on Thursday after showing rapid growth which closed the price level at $40.61 per barrel. This happened upon the encouragement of the negotiation process for the adoption of new financial incentives in the US.
Recall that the main task of this program is to support all organizations and households that have suffered from the crisis that occurred against the background of the coronavirus pandemic. The adoption of incentives has been expected for a long time, this is an extremely acute and fundamental issue for the current US President Donald Trump.
Any progress in the negotiation process has a positive impact on the mood of market participants. Thus, the words of House Speaker, Nancy Pelosi, that the warring parties are very close to reaching a consensus, gave due support. However, until now, a number of experts remain firm to their previous assumptions that it will not be possible to conclude a deal before the US presidential election. Nevertheless, they argue that recent events will still contribute to the early ratification of the painful bill.
Meanwhile, another important aspect affecting the stock market continues to deteriorate. The epidemiological situation in the US is getting worse. Over the past day, the number of cases in the country has increased by 60,000 cases at once. Now, the total number of cases already amounts to 8.2 million since the pandemic started.
Some parts of Asia, on the other hand, shows that they are already on the path of active recovery from the consequences of COVID-19. This somehow positively affected the oil market. Among the countries which are leading on the records are India and China, which reflected an increase in key indicators in their economy. This, in turn, may be the starting point for the recovery of global demand for crude oil and petroleum products in the sector.
Another factor for growth is Russia’s temporary delay in increasing crude oil production. Recall that earlier it was reported that the country will increase the level of extraction of raw materials immediately after the new year. According to new data, this process has been postponed indefinitely until the market situation stabilizes.
Nevertheless, some analysts still believe that in the medium and long term, the growth potential of the cost of crude oil will remain extremely limited. The reason for this will be the rapid drop in demand for gasoline and other petroleum products. Already this week, statistics on the level of gasoline stocks in the US turned out to be very negative. Gasoline inventories rose 1.9 million barrels. Restrictive quarantine measures by no means contribute to the normalization of this indicator, but only exacerbate the situation.
All of the above, however, is more likely evidence that the cost of WTI crude oil will remain under pressure, but this will not prevent it from storming the highest weekly mark of $42 per barrel in the near future.
The material has been provided by InstaForex Company — www.instaforex.com