Oil Monthly Fundamental Forecast – May 2016

Crude Oil spent the month on a roller coaster ride ending at the top of a downhill trough. Traders will most likely begin to sell to book profits after oil ended the month at 46.02 seeing a gain of 20% this month. Brent Oil ended at 47.39. Oil will most likely hold gains leading to the June 2^nd meeting of producers.  oil prices fell slightly on Friday, but still finished the week up roughly 5.63 percent at $45.44 per barrel. As Reuters reported, the energy commodity earlier hit its highest level in 2016 on Friday after US oil rig counts came in at 332, down from 679 last year. That news, along with a weaker dollar, encouraged optimism that oil oversupply could be waning.

The moment of the crossing of the psychological limit of the price for a barrel of oil is the cause for activation of the world media, and dramatic titles due to the number 50 might be seen very soon.

Namely, the value of the European version of the black gold has been growing without significant pauses since January 20, when a record-breaking low price of 27.7 dollars per barrel was registered. The only noticeable moments of possible change of direction occurred in early February and late March, and lasted for several days only.

Even the recent failed meeting of representatives of world’s largest oil exporting countries proved to be only temporarily dangerous because the prices kept growing steadily. As a reminder, an agreement on the “closure of the faucet” was supposed to be reached at a meeting in Doha, all with the aim of establishing better control and evoking the price growth.

According to the current situation, value of the US and European oil is approaching the psychological limit of 50 dollars, which might be crossed in the several coming weeks. Price of the European Brent amounted to more than 47 dollars on Thursday.

Certain analysts think that the crossing of the 50 dollars’ limit will cause an increase in production and stabilization of prices.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.

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