Over the past two weeks, the reports on oil reserves in the USA show record-breaking stockpiles of black gold. According to report of the American Petroleum Institute, the stockpiles rose by 9.940 million barrels in the last week, as reported by the Energy Information Administration (EIA), the increase was 9.527 million barrels. But the market ignored the data, and the oil price even slightly increased after releasing the report. The report on the number of Baker Hughes drilling rigs was released on Friday, it showed another increase in drilling rigs from 591 to 597, the growth already lasts for 5 consecutive weeks and is a high since November, 2015, which is a negative factor for the oil market. Investors played all their attention to complying and extending the agreement of the OPEC and other oil producers to reduce the production of black gold.
The Organization of Petroleum Exporting Countries (OPEC) and other producers including Russia has agreed to reduce its extraction by almost 1.8 million barrels a day during the first half of 2017. The compliance with the OPEC agreement was about 90%, as well as other oil producers including the OPEC stated that they could extend the treaty or apply a deeper reduction since July unless the global stocks of raw materials will drop enough and the market balances. At the same time, investors fear that the record-breaking oil reserves and the increased drilling activity in the USA will pose an obstacle to achieving a balance at the world market. The data of the U. S. Commodity Futures Trading Commission (CFTC) showed on Friday that the hedge funds increased their long positions for buying oil to new highs. And this behavior can cause a correction down on the oil market to get stop losses, before the price goes up, hit fresh highs. We recommend to enter into purchases beginning with the correction, the purchase levels for the Brent mark are 54.4, 53.8 dollars per barrel. If the price drops below the level of 53.8 dollars per barrel and becomes fixed below this level, then it is possible that the prices will return to the level of 50 dollars per barrel of the Brent mark.