Sébastien Bischeri
Sunshine Profits
Falling oil demand and bearish US inventories are not of any good to WTI investors. However, a deeper slide might be a great place to enter the trade…
Fundamental analysis
The Organization of Petroleum Exporting Countries (OPEC) has downgraded its estimate of world oil demand for 2021. The demand has been lower than expected so far despite strong prospects for the end of the year.
In fact, in its monthly report, the cartel estimates that oil demand will rebound by 5.82 million barrels per day (mb/d) this year, while it forecast 5.96 mb/d last month.
Global crude demand is therefore expected to reach 96.6 mb/d this year.
As a reminder, the member countries of the cartel and their allies (OPEC+) chose at the beginning of October to renew their strategy of a modest increase in production, ignoring the calls to open the floodgates further and thus propelling prices upwards.
By the way, the two oil-producing countries that contributed the most to this increase are Nigeria and Saudi Arabia.
US API weekly crude oil stock
Inventory levels of US crude oil, gasoline and distillates stocks, American Petroleum Institute (API) via Investing
Regarding the API figures published on Wednesday, the increase in crude inventories (with 5.213 million barrels versus 140k) was more than expected – this implies weaker demand and is bearish for crude prices. However, we have yet to see whether or not these figures are confirmed by the weekly Energy Information Administration's (EIA) report published later today.
If this scenario is confirmed by the EIA’s figures later today, then the black gold will be well set for a deeper correction, possibly back to its lower support levels – levels which, by the way, were provided yesterday to our premium subscribers, along with our most recent projections.
WTI Crude Oil (CLX21) Futures (November contract, daily chart)
Finally, to wrap up today’s article, we have seen a few choppy days on the energy markets with some contradictory data to interpret. This uncertainty usually leads to a ranging market, which can be an interesting place for some shorter- term trades. For a longer-term trade horizon, it is necessary to combine some fundamental analysis with your charting and be patient.
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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' employees and associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
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