Saudi Arabia will significantly reduce the supply of oil to the United States

On Friday, December 14, it became known that in the near future, the Saudi authorities will sharply reduce oil supplies to the United States. The reason for this is the surplus reserves of black gold, which rose by 50 million barrels since September of this year.

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Oil prices showed strong growth on Thursday. Experts find two explanations for this: first, the market regains the reduction of black gold reserves in the United States, and secondly, it is also preparing to reduce raw materials due to Saudi Arabia's plans in the coming weeks to drastically reduce US oil supply stocks, which since September, it rose by 50 million barrels.

According to Bloomberg, Saudi Aramco, the largest oil company in the kingdom, warned the US refineries of a large-scale supply decline in January 2019. It is expected that their volume will be reduced to 0.6 million barrels per day, which is 40% lower than the average value for the last three months of 2018.

Experts believe that this measure on the part of Saudi Arabia will demonstrate the seriousness of the kingdom's intentions after the adoption of the new OPEC + agreement. The dynamics of oil and petroleum products in the United States has a significant impact on the world market, so the actions of the Saudis will not pass without a trace. Analysts find it difficult to answer whether these actions will have a positive or negative impact on the global black gold market.

According to Bloomberg in January 2019, Saudi oil exports could reach 7 million barrels per day, which is less than in the period of November-December 2018. According to Khalid Al-Falih, Minister of Energy of Saudi Arabia, the authorities of the kingdom intend to reduce production by 10.2 million barrels per day from the November level of 11.1 million barrels. Experts point out that current news has not led to an increase in black gold prices, which have not yet recovered from the recent collapse.

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What will drive oil refineries in early 2019?

Earlier this year, oil conquered one peak after another, aided by two main factors. One is increased demand and the other, a limited supply. At the present time, the hydrocarbon market is experiencing a difficult time. The forecasts of experts regarding the future prospects of black gold differ. Someone expects a fall in prices and a moderate decline in quotations in the second half of 2019. Others are hoping for an increase in oil demand in the coming year, which resulted in a recovery. The average oil price forecast for 2019 is $ 60-65 per barrel for Brent.

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What factors will most strongly affect the quotes in early 2019?

OPEC and RF mining levels

OPEC members and other major oil producers in the world decided at a meeting in December to reduce the level of oil production by 1.2 million barrels per day compared to the level recorded in October. The hardest to "shrink" will be Saudi Arabia, which produced by 350 thousand barrels per day in November more than in October. Save the current mark, perhaps, it will turn out in Iran. Recall that its production rate in November actually decreased by 31 thousand barrels per day.

If the cartel suppliers join the deal, which is unlikely to happen, the total production of OPEC in January 2019 will be close to 32.214 million barrels per day. In this scenario, the decline in production compared with the November marks of 866 thousand barrels per day will be insignificant.

The oil "came to life" with a little on the announcement by the cartel members of their intention to lower production levels and then went down again. This is a clear sign that the announced restrictions, even together with an additional 400,000 barrels from OPEC +, will not be enough to stimulate quotes. Perhaps this level of decline will be enough to stabilize prices in 2019. One thing is clear here: the growth of oil needs additional restrictions.

Iran sanctions

In November, America freed 8 importers of Iranian oil from anti-Iranian measures. To discuss this issue, the United States will return in April. The main intrigue is whether the changes will be extended, reduced, or completely reversed. Due to these measures, countries are able to buy at least 850 thousand barrels per day. The volume is insignificant, given that the global oil industry produces about 100 million barrels per day, but at the moment it is of great importance and is able to influence prices.

Large oil producers will appreciate the result of restrictive measures precisely in April because, at this time, Washington will review the exceptions to the sanctions.

It should be noted that the refusal of the United States to extend anti-Iranian measures will lead to an increase in oil prices if OPEC and the Russian Federation continue to reduce production.

The development of the oil industry in America

The United States has become the world leader in producing black gold. Fresh data from the Energy Information Administration showed that the country managed to achieve a record of 11.5 million barrels per day in September. High rates remained in November. EIA estimates the figure at a similar 11.5 million barrels.

Last week, the United States became a net exporter of crude oil and fuel but this week they have not confirmed their title. As for the next year, the EIA expects that the average level of production in the States will be 12.1 million barrels per day. Factors such as trade war, rising interest rates and infrastructural constraints can undermine growth.

Since rumors that the Fed will pause the process of tightening policy in 2019, are actively playing, we should expect to maintain the flow of investment in shale oil injection companies.

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Bitcoin analysis for December 14, 2018

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Trading recommendations:

According to the H1 time - frame, I found that BTC breached the support trendline in the backgorund and that upward correction has finished. My advice is to watch for selling opportunities. The downward targets are set at the price of $3.112 and at the price of $2.894.

Support/Resistance

$3.262 – Intraday resistance

$3.170– Intraday support

$3.112 – Objective target 1

$2.894 – Objective target 2

With InstaForex you can earn on cryptocurrency's movements right now. Just open a deal in your MetaTrader4.

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GBP/USD analysis for December 14, 2018

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Recently, the GBP/USD pair has been trading downwards. The price tested the level of 1.2529. According to the H1 time – frame, I have found that the momentum is on the downside, but in my opinion the sellers may got exhausted. Due to potential oversold conditions, my advice is to watch for buying opportunities if you see that breakout of the supply trendline. The upward targets are set at the price of 1.2600 and at the price of 1.2623.

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The gold is getting cheaper, and the dollar is rising ahead of the Fed meeting

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At the trading at the end of the week, the price of gold falls amid rising US dollar exchange rate before the Fed meeting with an interest rate decision.

As of 14:30 London time, the value of gold fell by 0.59%, to $ 1,240.05 per troy ounce.

At the same time, the index showing the strength of the US dollar relative to a basket of six major currencies increased by 0.62, to the level of 97.655.

Gold is getting cheaper against the background of the dollar gaining strength. Most financial analysts predict that at a meeting next Wednesday, the US Federal Reserve will raise the key interest rate by 25 basis points, the fourth time this year.

However, the strengthening of the dollar may be short-term, since experts also believe that the US central bank may slow down the rate of interest rate increase next year.

As a rule, the price of gold is inversely correlated to the US dollar, because the precious metal is traded in US currency.

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