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Oil prices retrace to 2012 highs

Crude futures continue to rally for the third day, surging above $100/bbl on March 1. Today the Brent price is up 2.6% at $116.08/bbl, while WTI is 3.2% higher, trading north of $113/bbl.

The oil market has moved up from the 2014 highs to 2012 highs. One of the key factors driving the rally was yesterday's decision by OPEC+ to maintain its quota for increasing production in April at 400,000 bpd. In addition, the market is being impacted by disruption in the supply of Russian oil to Europe due to the sanctions, as well as expectations of a possible embargo on Russian hydrocarbons, despite the fact that the US and the EU at this stage prefer to exercise great caution about the likelihood of such a scenario. Meanwhile, global investment banks JP Morgan and Goldman Sachs warn that if an embargo is imposed on Russian oil, even the complete lifting of the embargo on Iranian would do little to significantly bring down oil prices.

The Brent price over the past three days has broken out of all possible and seemingly impossible resistance levels until recently. The next target for Brent is $117-118.5/bbl, so today we expect to see Brent trading in the range of $115-117/bbl.

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