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Oil prices rise as expected

On Wednesday, 2 November 2022 oil prices rose, after industry data showed a surprise drop in US crude inventories. According to analysts, this fact indicates that demand is on the rise, despite the sharp increase in interest rates, which dampens global growth. Oil prices thus headed even higher, despite today’s expectation of a further increase in interest rates in the USA. According to the prediction of financial strategists, the head of the central bank of the Federal Reserve System (Fed) Jerome Powell will announce an increase of 0.75% per year after the Federal Open Market Committee (FOMC) meeting in the European evening hours.

On 2 November 7:21 am CET, the light crude oil West Texas Intermediate (WTI) traded on the New York Mercantile Exchange (NYMEX) commodity market at US$ 89.35 per barrel with a daily price increase of +1.10%. This price, according to the data of technical analysis, represents an annual price growth of +24.86% in the last 52 weeks. However, since the beginning of 2022, the increase in the price of WTI oil has been more dynamic, with the price of WTI oil increasing by +27.43%. The European counterpart of WTI crude oil,  North Sea Brent crude oil, traded at US$ 95.61 per barrel on the Intercontinental Exchange Europe (ICE) commodity market, with a daily price increase of +1.01% so far. The current price represents an annual increase of +27.66% over the last 52 weeks, with Brent oil prices strengthening by +30.29% since the beginning of this year.

On 2 November, according to the US Dollar Currency Index (DXY) – which compares the value of the USD to the other six major world currencies – we saw the USD at a price level of 111.35 with a daily decrease of -0.12%. At the time mentioned, the global currency pair of the single European currency euro (EUR) and the US dollar (USD) traded at a mutual exchange rate of US$ 0.989 per EUR, with the previous daily strengthening of the EUR by +0.09% against the USD. However, despite the current weakening of the USD and the strengthening of the EUR, this global currency pair remains in a relationship below the parity values of the euro against the dollar.

Both benchmark contracts, West Texas Intermediate and North Sea Brent, rose yesterday by roughly more than 2% due to a weaker USD and rising oil prices. Also an unverified news appeared on social media that the Chinese government would consider ways to relax anti-covid rules as early as March 2023. Another positive sign for demand is Tuesday’s American Petroleum Institute data, when according to market sources, crude inventories fell by about 6.5 million barrels for the week ending 28 Oct. Eight analysts polled by Reuters had expected crude inventories to rise by 400,000 barrels. At the same time, gasoline inventories fell more than expected, with those inventories down 2.6 million barrels, compared with analysts’ forecasts of 1.4 million barrels. Based on these data, analysts and financial strategists of the commodity market predict a continued rise in oil prices on the global commodity market.

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