Rebounding Crude Oil Gets Far Away from the Bearish Side / Commodities / Crude Oil
Demand for crude oil is accelerating –a bullish sign for its prices. What may the current energy market environmentsay about the black gold’s outlook?
AChinese Panda’s Appetite
On the Asian continent, the lifting ofhealth restrictions in China could signal resuming oil demand for the world’stop consumer. Given the context of tight supply, this has partially triggered arebound in crude while driving prices higher.
GeopoliticalScene
The Libyan National Oil Company (NOC)warned that they could declare a state of "force majeure" on thefacilities in the Gulf of Sirte – blocked due to the political crisis that hasbeen hitting the country for months.
In Ecuador as well, the spectre of a haltin oil production is becoming clearer following the blockades anddemonstrations initiated by a movement protesting the rise in the cost ofliving.
OPEC+Struggles to Increase Volumes
The United Arab Emirates assured thatthey were at maximum capacity, while Saudi Arabia stated it could pump anadditional 150,000 barrels per day. It is important to note that these twoproducing countries are indeed the two OPEC+ members perceived to have the mostspare oil production capacity. The 23 members of OPEC+ are just starting aseries of two-day e-meetings on Wednesday (they should also meet on Thursday byvideoconference) to decide on a new adjustment to their total volume ofproduction of black gold. However, analysts expect the status quo despite numerouscalls for action.
Fed’sRecession Denial?
The US economy is slowing down, but notto the point of falling into recession, the president of the New York branch ofthe Federal Reserve (Fed) said to CNBC Tuesday. The mighty Federal Reserve hasraised rates three times since March. The latter are now in a range between1.50% and 1.75% after remaining close to zero during the COVID-19 pandemic.
FundamentalAnalysis
On Tuesday, the American PetroleumInstitute (API) released their weekly oil stock figures.
U.S.API Weekly Crude Oil Stock
The weekly commercial crude oil reservesin the United States dropped to -3.8M barrels while the forecasted figure wasjust about -0.110M, according to figures released on Tuesday by the US AmericanPetroleum Institute (API).
US crude inventories have thus decreasedby over 3.799 million barrels, which firmly shows accelerating demand and couldbe considered a strong bullish factor for crude oil prices. This figure wouldindeed signal a rise in fuel consumption. As a result, demand is now holding upwell as the peak of the summer driving season approaches with many trips.
(Source: Investing.com)
WTI Crude Oil (CLQ22) Futures (Augustcontract, daily chart)
RBOB Gasoline (RBQ22) Futures (Augustcontract, daily chart)
Brent Crude Oil (BRNQ22) Futures (Augustcontract, daily chart) – here it is represented by its Contract for Difference(CFD) UKOIL
That’sall, folks! Happy trading!
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Thank you.
Sebastien Bischeri
Oil & Gas Trading Strategist
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