|Brent price at decision point|
|By A/S Global Risk Management.
|Updated on 31 Jan 2018 08:49 GMT
|$68 has been a key level for the Brent price during most of January. The price tumbled from above $70 to its current level as the dollar index gained from last week's decrease and the US crude production as well as oil rig count rose.
At the time of writing, the dollar index has gained modest strength since last week's intraday low and the Brent price hovers around the $68 mark.
Yesterday, the American Petroleum Institute released its inventory stats showing a build in US crude inventories of 3.23 mbbl, a build in gasoline of 2.69 mbbl and a draw in distillates of 4.1mbbl.
If the EIA confirms a build on the crude stocks this afternoon we could soon see the streak of draws turning as the maintenance season kicks in. While the refineries are undergoing maintenance, the crude demand drops, and the inventories of crude start to build, which could weigh on prices. Additionally, the US has boosted the number of active drilling rigs, and thereby the total production, which is putting further downwards pressure on the price. Meanwhile, the strength of the dollar has been declining for a while, which typically concludes in higher oil prices. So right now, the market is balancing between two factors: the possibility of rising inventories in the US (bearish) and the possibility of declining dollar index (bullish).
The next point to look for is the EIA inventory stats released later today, to see if they report a build in crude as well. If not, we could see the price bouncing up from $68.
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