Following an upbeat week, crude oil stocks again added a positive tone as crude oil inventories dropped another unexpectedly large 3.88 million bbls vs a predicted 2.1 million decline. Nonetheless, OPEC supply is offsetting the positive impact of inventory declines as demand worries linger, Bart Melek, Head of Commodity Strategy at TD Securities, briefs.
See – WTI Price Analysis: Under pressure after hanging man candle
Key quotes
“Following an upbeat week, crude oil stocks again added a positive tone as crude oil inventories dropped another unexpectedly large 3.88 million bbls vs a predicted 2.1 million decline. Adding to this positive is the unexpectedly large 7.2 million bbl distillate stocks decline and the 1.6 million bbl gasoline inventory drop. With exports falling by 524K bpd and imports dropping imports 446K bpd, the trade side of the report was more or less neutral.”
“With the US no longer pursuing a new fiscal stimulus plan which has any chance to be ready before the election, the second wave of COVID-19 is once again reducing economic activity and oil consumption projections. As such, significant crude oil upside is not expected for now.”
“I suspect that WTI will have a hard time to move much above resistance near $41/bbl, at least in the near-term. And, there is a risk that election-related uncertainty may send it even lower to support just under $36/bbl.”
With OPEC+ set to add millions of barrels of crude oil to the global market next year, even as concerns surrounding demand grow – OPEC, the IEA and EIA all suggest additional OPEC supplies in early-2021 would create large surpluses – it won't take much for crude to move back towards recent lows. However, the market is looking for a suspension of the planned OPEC+ deal tapering, which could be one catalyst for oil to gravitate higher.”
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