Market news
11.01.2021, 15:08

Oil: The risk of a downward correction is substantial - ABN Amro

FXStreet notes that the price of oil has already risen to over $55/barrel for Brent and $51/barrel for WTI after OPEC, together with its partners led by Russia (together OPEC+), has agreed on a new production level for the months of February and March. Nonetheless, strategists at ABN Amro do not expect oil prices to rise much further in the short-term as the risk of a downward correction is substantial. 

“The first serious resistance level is around $60/barrel. Only when the Brent oil price drops below $46.50/barrel, the positive sentiment will reverse.”

“The weaker dollar and the expectation that the economy will receive an extra boost from financial support programs by governments and central banks are also seen as factors that could support the oil price even further. The economic stimulus packages will indeed lead to higher economic growth. The question is whether this will have a strong effect on the demand for oil from the current level.”

“The demand for oil will indeed increase as the economy opens up further. The main drop in demand for oil is seen in aviation. Even now that the vaccination program has started, it will still take a long time before aviation gets back on track. The market's expectations with regard to the expected recovery in oil demand are well ahead of reality.”

“OPEC+ will produce 7,125 mb/d less in February than before the corona crisis, and 7,05 mb/d less in March. This means that the supply on the market is reasonably in line with current demand. Global inventories are still above average. But just as important is the fact that this production capacity can be deployed fairly quickly as soon as there is room for it. Russia, in particular, is keen to increase the oil production of the OPEC+ as soon as demand actually picks up and/or the oil price rises. This limits the upward potential for the oil price.” 

“The market is currently long positioned (speculating on price increases). And although there is still room for further expansion of the position, we do not think there is currently any reason to do so. Much of the positive news has now been priced in.”


© 2000-2024. All rights reserved.

This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.

Bank
transfers
Feedback
Live Chat E-mail
Up
Choose your language / location