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“Report”: Oil price may rise again in January - ANALYSIS

Decline in oil price is mainly related to uncertainty of investors

Baku. 25 December. REPORT.AZ/ The last quarter of 2018 was unsuccessful for oil futures.

Report’s analytical group says that Brent and WTI crudes faced nearly 40% loss in their value in the fourth quarter.

The decline was caused by different factors, including a slowdown in commodity market, increase in interest rate by the US Federal Reserve System, delay in Brexit, unresolved problem of Italy’s state budget deficit, the US-China trade war. All these economic and political factors contributed uncertainty among investors who started mass sales of equities fearing decline in oil prices.

Moreover, the supply exceeded demand due to the fact that the number of active wells in US has reached a record, sanctions against Iran were not so tough as expected, some countries are allowed to import oil from Iran. Consequently, the oil price fell.

In early December, OPEC+ decided to cut oil output by 1.2 million barrels per day. The analysts were expecting 1.4 million barrels. As the oil producers did not justify their hopes and Qatar left OPEC on the eve of the meeting, the investors’ concern stimulated a decline in oil price.

The decision on output cut will enter into force in January. Market participants will probably respond to this decision and certain growth will be observed in oil price. 

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