Brent April 2018

Brent April 2018

17 April 2018Reading time: 3 minutes

The prevailing fear for a trade war between the United States and China has driven up the oil prices. Also the weak American dollar pushes the oil prices up. Has the peak been reached yet?


Early April the Brent oil price increased with more than 3% to $71.34, which is the highest level since 2014. In the days after that, Brent remained at the same level due to the increased political tensions in the Middle-East. The American president Donald Trump announced to take action against the possible recent poison gas attack in Syria. In line with that, Trump might also decide to cancel the nuclear deal with Iran. In 2015 several Western Countries such as the US, decided to lift some economic sanctions against Iran. In exchange, Iran would drastically curtail its nuclear program. However, Iran has promised to support the Syrian government. Whenever the nuclear deal would be cancelled by the US, this could lead to new sanctions against Iran. This could, among other things, effect the oil industry en drive up the oil prices.

Another factor which supports the price of a barrel Brent oil is the weak American dollar. The currency is currently pressurized by the policy and several claims of Donald Trump. The American president has a generous fiscal policy, with the purpose to boost the American economy. Recently the dollar has slightly risen again, because the Federal Reserve has been more optimistic about the prospects for the American economy. They hinted that perhaps more interest rate increases will follow than previously was taken into account. If the dollar would strengthen in the coming months, this could push down the oil prices. However, the future development remains to be seen.

Furthermore, the OPEC could play an import role for the oil prices during the next couple of months. The OPEC observed in March that the oil production in countries which are members of the oil cartel plummeted to lowest level in a year's time. They expect that due to the healthy economic prospects for 2018 and positive car sales during the past months, the worldwide demand for oil will increase with 30,000 barrels a day to a total of 1.63 million barrels a day. Because the OPEC maintains a production restriction for now, this could result in higher oil prices. However, when the OPEC would decide to ease on the oil production restrictions, this could push down the oil prices. The future oil price is subjected to several political, industrial and sector specific, as well as economic factors. Investors should consider these risks when making their investment decisions. Developments can be different at any time than investors anticipated on, which could result in capital losses.
Vontobel products on DSM are tradable at DEGIRO.


Important legal information:

This information does not constitute a financial analysis, but product advertisement. Thus it does not meet the legal requirements to ensure the impartiality of financial analysis and is not subject to trade prohibition before the publication of a financial analysis.

Fordetailed information, particularly regarding the structure and the risks associated with an investment in the derivative financial instruments, prospective investors should read the Base Prospectus, which is available together with the Final Terms and any supplement to the Base Prospectus in electronic form on the issuer’s website: http://beursproducten.vontobel.com. Additionally, the Base Prospectus, anysupplements to the Base Prospectus and the Final Terms are available inprinted form, free of charge, at the registered office of the issuer: Vontobel Europe AG, Bockenheimer Landstrasse 24, 60323
Frankfurt am Main, Germany.


Investors should consider the applicable selling restrictions.
Companies of the Vontobel group may directly or indirectly pay commissions in varying amounts to third parties (e.g. brokers) in connection with the public offer and the distribution of the derivative financial instruments. Further information is available upon request from your distribution partner.

 

16/06/2019 08:55:44