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In trading on Wednesday (11), crude oil futures prices rose moderately and closed for the third day in a row this week. This was due to the optimistic market view on the outlook for the COVID-19 vaccine, and API data showed that US crude oil inventories fell dramatically.
However, due to the expected decline in demand from major oil producing countries, traders are concerned that crude oil futures prices have closed at today’s low.
Edward Meir, an analyst at ED&F Man Capital, said API data showed that last week (the week ending November 6) the supply of crude oil from the United States fell 5.1 million barrels, beating analysts’ expectations. , which supports the increase in oil prices.
“But at the same time, European countries’ lockdown measures are becoming increasingly stringent, and many US states have imposed more restrictions on activities. These will curb energy demand in the short term. We believe that once If the current uptrend subsides, crude oil will resurface. Because the advance of vaccines did not happen in an instant, but the destruction of demand is now happening widely and is becoming increasingly intense.
- The price of WTI crude oil futures for December delivery rose 9 cents, or nearly 0.2%, to close at $ 41.45 a barrel, an intraday high of $ 43.06.
- The price of Brent crude futures for January delivery rose 19 cents, or nearly 0.4%, to close at $ 43.80 a barrel.
Fueled by the positive news about vaccines, WTI crude oil is up almost 12% so far this week and Brent crude is up more than 11%.
On Monday, WTI crude oil was up 8.5% and Brent crude soared 7.5%, as Pfizer (PFE-US) and BioNTech (BNTX-US) announced that their new crown candidate vaccine is 90 % effective in preventing new corona virus and has no prior SARS infection. CoV-2 evidence encourages investors to flock to risky assets.
ThinkMarkets analyst Fawad Razaqzada noted in a report that Brent crude oil has broken through several major barriers, so now the path of lower resistance for crude oil has moved up. “So when it is expected to back off, it will support the increase.”
Razaqzada said that Brent crude oil has broken the downtrend line since early summer and the resistance of the range of US $ 43.40 to US $ 44. This range has now become the “first support zone” that the bulls must defend. If it breaks below this area, Brent may be The test is at the upper end of the breakout trend line near $ 41.50. From the upside, the $ 46.50 area is the next bullish target for the bulls, followed by the psychologically important $ 50 barrier. “
Expected decline in demand from major oil producers
OPEC announced its monthly report on Wednesday. OPEC will reduce global oil demand this year by 300,000 barrels per day to 91.0 million barrels per day, which is approximately 9.8 million barrels per day less than total oil demand estimated on last year.
AIP report
Industrial trading group API announced Tuesday night that last week US crude supplies fell 5.1 million barrels, gasoline inventories fell 3.3 million barrels and distillate oil inventories fell 5.6 million barrels. Crude oil inventories at the Cushing, Oklahoma, storage facility fell 1.2 million barrels this week.
The EIA will release last week’s power supply report on Thursday, because Wednesday is Veterans Day and is a federal holiday, but commodities are traded as usual on that day.
According to an S&P Global Platts survey, analysts expect crude oil supply to decline by 3 million barrels on average, gasoline inventories to decline by 600,000 barrels, and distillate oil to decline by 2 million barrels last week (through November 6th).
Trade in other energy raw materials
- The price of gasoline futures for December delivery fell 1.5% to close at $ 1.1759 a gallon.
- The price of thermal oil futures for December delivery fell 0.5% to close at $ 1.2458 a gallon.
- The price of natural gas futures for December delivery rose 2.8%, closing at US $ 3,031 per million Btu.
The EIA’s weekly natural gas supply data will be released on Friday, also due to the holiday on Wednesday.
According to an S&P Global Platts survey, analysts expect, on average, natural gas supplies to fall by 4 billion cubic feet last week (through Nov. 6). This compares with an average increase of 33 billion cubic feet over the past five years.
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