Oil Analysts Suggest Selling on Optimism

The WTI crude oil has shown some resilience but it is not necessarily ready to break higher. There’s a complete disconnect between those who are already thinking about what the world will be like after the coronavirus and those who see the day to day reality. We are indeed waiting for the arrival of the vaccine. Still, we will run out of oil storage space before it can be distributed amongst the population. So, at some point, there will have to be an adjustment in the market. At this point, analysts think the best strategy seems to be looking for short-term selling opportunities. Especially after the market shows signs of fatigue. 

The Brent crude has also attempted to climb at the beginning of the day. Analysts think low demand for crude oil is expected. According to them, the vaccine will arrive in less than a year. However, we have to bear in mind that this has nothing to do with what is happening right now. And in fact, the global economy can’t grow suddenly. Disappointment is going to play an important role, and that is why analysts suggest taking advantage of the optimism by selling every time the price goes into overbuying territory.

EUR/USD forecast for November 19, 2020

Petroleum giant, Aramco, shows dire situation of the oil sector

Saudi Aramco, the national company of Saudi Arabia, has reported very negative financial results in the Q3 of 2020. The company declared in its report that its profit for the quarter was 44.21 thousand million Saudi riyals ($11.79 billion). It represented a sharp decline of 44% from the 79.84 billion riyals it earned in the third quarter of 2019.

The latest data released by Aramco show a very sharp contrast to the continued optimism led by OPEC+ that markets are recovering slightly. The truth is that the company, still valued at about 2 trillion dollars, is still fighting a challenging battle against the continued collapse of the market. The coronavirus pandemic caused the drop in demand. For the last quarter of 2020 and the first half of 2021, even worse results can be expected as oil prices reflect an increasingly negative sentiment of the market. There is uncertainty about the impact that quarantine will have on oil demand.

Besides, the victory of Joe Biden in the US presidential elections could aggravate the situation in the sector. According to some analysts, it would allow Iran to inject oil and gas into the markets again.

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