The price of Oil increased in value during this morning’s Asian and European Session but continues to remain under pressure from negative factors. The price of Oil this morning increased from $94.14 to $95.42 but still remains relatively lower than the previous trading day’s price high.
Overall the price of oil has been moving within a downward trend with each impulse wave forming a much larger and stronger price movement compared to corrective waves. Each time the asset has attempted to create a bullish wave on the daily timeframe, it has resulted in the price losing momentum landing lower. The question now is whether the price will again lose momentum, and will it decline to a lower price low. Currently, the lowest recent price is at $88.30 which forms the closest support level.
One of the reasons which the instrument has been pressured is the reopening of 5 oil fields in Libya which had been out of action for many years due to the country’s Civil war. According to reports the oil production from these 5 oil fields have exceeded more than 800,000 barrels per day. The local government speakers have advised that this may increase to over 1 million barrels per day in August or very late September. The higher levels of supply is a concern for investors as it is predicted that the demand for energy may decrease during the autumn months due to lower levels of economic activity.
Another concern for investors is the high gasoline prices which are being witnessed all around the world. According to the report, the high prices are resulting in a much lower demand even as governments around the world input temporary measures to try and lower prices. In addition to this, investors are also considering the latest interest rate hike which may be as high as 1%. The higher interest rates are feared to potentially slow the economy and again lower the demand for gasoline further.
Something else which traders are following is President Biden’s latest move against the Russian Oil Market. The President plans to impose a maximum price of around $40 – $60 for oil from the Russian. According to reports, an agreement has already been reached with the members of the G7. This agreement will allow balancing energy supplies in the most dependent states and reduce the income of Russia which initiated a special military operation on Ukrainian territory. Also, Biden called on major players in the national oil market to channel record profits from the high oil cost to increase production and processing capacities.
The issue with the move is that we do not necessarily know how Russia is likely to react to such tough sanctions. Some members of the Russian Government have advised they will altogether stop supplies which can have a catastrophic impact on the oil market and can result in a very different type of price condition.
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