OIL MARKET REVIEW AND A FORECAST FOR LIGHT SWEET CRUDE OIL, MARCH 24-28, 2014

Price of Light Sweet (WTI) oil was growing the whole week, except Tuesday, when it dropped to $97/barrel. Maximum of the week was registered at $99.40.

Federal Reserve meeting supported WTI quotations. As it was expected, the committee made a decision to cut a program of assets buyouts from $65 billion to $55 billion. An unemployment level was also updated by the Federal Reserve. According to the forecast, it should decrease to 6.1-6.3%% in 2014. The forecast made in December 2013 expected a decrease to 6.3-6.6%%.

The improved unemployment forecast and further cuts of the stimulation measures show economic recovery in the USA, which leads to the increase of demand for oil.

Weekly data by EIA is mixed for WTI quotations. On one hand the stock of distillates decreased by 3.097 million barrels, which exceeded experts? expectations (a decrease by 0.625 million barrels only was expected).

On the other hand, the stock of raw oil grew by 5.850 million barrels, while experts predicted growth by 2.608 million barrels.

Further confrontation between Russia and USA because of the situation in Ukraine will affect oil?s price.

George Soros in his recent interview said that USA can impose the strongest sanctions against Russia, as USA can sell oil from its strategic reserve.

Let us remind that USA announced a test sale of the strategic oil reserve (5 million barrels), which is a quarter of the daily US consumption of oil.

Last test sale was conducted in 1990 after Iraq?s intervention to Kuwait and after the start of the Gulf War. 3.9 million barrels were sold then.

An announcement by the US authorities about the intention to conduct this test sale caused a decrease of the price by $1.
If the volume of the oil sales from the strategic reserve increases, it will plummet down oil quotations.

Technical analysis shows that oil can keep growing. Nearest resistance level for bulls is located at $99.40. If this level is breached, it can lead to the price growth to $100.200, $101.200 and $102.400.

However, if $98 is breached down, then oil price can get corrected. If it happens, then price can drop to $97.00 and $95.80.



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This information is an analytical review of Capital and FX markets. The material presented, and the information contained, is investment research and should in no way be considered as the provision of investment advice for the purposes of Investment Firms Law 144(I)/2007 of the Republic of Cyprus, or any other form of personal advice, which relates to certain types of transactions, with certain types of financial instruments.

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