Yesterday oil reached its minimum in the past month. It happened amid the information from Saudi Arabia that the country made a pledge to compensate any shortage of oil in the market associated with the US sanctions against Iran. In fact, we are talking about a sharp increase in the production of Saudi Arabia. Which in turn, could trigger a new round of struggle for a share of the oil market, as it was already in 2014. How it ended then, everyone knows (just in case, we remind, oil ended down from $120 to $30 per barrel).
Apparently, the United States completely took advantage of a situation with the murder of Saudi journalist at the Saudi Arabian embassy. States has been trying before to put pressure on Saudi Arabia to increase oil production, but the Saudis resisted. So now, it seems that in exchange for the tacit consent of the United States to hush up the murder, they receive from Saudi Arabia a promise to open the oil tap to the maximum. According to various estimates, it is about an increase in oil supply by 1-2 million b/d
Taking into account all this is happening amid the IMF’s decrease of the global economic growth, and therefore the slowdown in oil demand, the oil market has all chances not only of forming a full-fledged correction but also of the long-term downtrend. Well, just in case, recall that oil reserves in the United States have been growing for the fifth week in a row and have grown by more than 20 million barrels over the last month.
Current events completely fit our forecasts and estimates of the ongoing situation in the oil market. While the drop which we’ve been observing recently - it’s just a beginning of a long descent. So, it's not too late selling the oil and make money on its drop.