Oil quotes depend on the dynamics of stock exchanges, and not on supply and demand

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According to a number of analysts, in the current month the cost of oil, as in December of the past year, is more tied to the dynamics of world financial markets than to the real balance of supply and demand. As a result, when the mood of market players changes, oil futures for Brent and WTI varieties may face a correction.

At the end of the last trading session, the oil quotes of the Brent reference mark increased by 4.69%, reaching $ 61.37. On Wednesday, January 9, the statements of the authorities of Saudi Arabia about a more significant reduction in oil production than provided for by the terms of the OPEC + transaction contributed to positive sentiment on the black gold market. General inspiration on the global stock exchanges, connected with the next round of trade negotiations between the United States and China, also contributed.

During the previous trading session, US stock indexes showed strong growth against the background of the publication of data from the Federal Open Market Committee of the US Federal Reserve (FOMC). The S & P 500 broad market index increased by 0.41%, closing at 2584.96 points, the Dow Jones Industrial Average gained 0.39%, and the high-tech NASDAQ added 0.87%. The yield on 10-year Treasury bonds declined by 2.719%, or 1 basis point (bp).

Last year, the American regulator, taking advantage of favorable economic conditions, raised the base interest rate four times, raising it to 2.25% -2.5% per annum. At present, the Fed leadership is leaning towards a more flexible policy that is capable of taking into account not only the internal but also the external economic situation. According to expert estimates, the main risks are still the slowdown in the growth of the world economy against the backdrop of trade wars and political and economic instability in Europe. In this regard, the regulator does not exclude two rate hikes instead of the planned three during 2019.

Experts come to the conclusion that the Fed is ready to take a short pause in a series of interest rate increases, but one should not expect any fundamental changes from the regulator. Recall that the Fed's goal is to achieve an interest rate of about 3%.

The material has been provided by InstaForex Company - www.instaforex.com