Below is quote and Outlook on Crude oil By Mr. Abhishek Bansal, Founder Chairman, Abans Group.
Crude oil is under pressure because of the deteriorating covid scenario-
WTI Crude oil prices are currently hovering at $73.17, a slight decrease from Friday's high. However, prices have risen considerably since a recent low of $65.21 on July 20th. Better-than-expected global economic data indicates strength in energy demand, which is bullish for prices. However, the dollar index's strength has limited the gains. Crude prices have been undercut on fears that the pandemic will worsen, resulting in additional restrictions that will stifle economic activity and demand.
On the economic front, personal expenditure in the United States increased by +1.0 percent m/m in June, above expectations of +0.7 percent m/m. In addition, the July MNI Chicago PMI surprisingly increased by 7.3 points to 73.4, above estimates of a decrease to 64.2 and marking the quickest rate of expansion in 36-1/2 years. Furthermore, Eurozone Q2 GDP increased by +2.0 percent quarter-on-quarter and +13.7 percent year-on-year, above expectations of +1.5 percent quarter-on-quarter and +13.2 percent year-on-year. Japan's industrial production increased by +6.2 percent m/m in June, above predictions of +5.0 percent m/m for the first time in 11 months.
Concerns over the delta Covid variant's global distribution are expected to keep oil prices under pressure. The number of people infected with Covid increased by 3.729 million in the week ending July 25, the greatest in two months. According to Johns Hopkins University, the overall global Covid-19 caseload has surpassed 198.2 million, with more than 4.22 million deaths and more than 4.11 billion immunizations.
As of July 23, US crude oil stockpiles were -7.1 percent below the seasonal 5-year average, gasoline inventories were -0.6 percent below the 5-year average, and distillate inventories were -6.8% below the 5-year average, according to the weekly EIA data.
Meanwhile, US crude oil output declined -1.8 percent w/w to 11.2 million BPD in the week ending July 23 and is down -1.9 million BPD (-14.5 percent) from the record-high of 13.1 million BPD set in February 2020.
Baker Hughes reported on Friday that active U.S. oil rigs fell by -2 rigs to 385 in the week ending July 30, down slightly from the previous week's 1-1/4-year high of 387 rigs. Active oil rigs in the United States have risen substantially from a 15-year low of 172 rigs last August, indicating increased crude oil output in the United States.
The net long position in crude oil futures increased by +1 024 contracts to 449 764 contracts for the week ending July 27, according to the CFTC Commitments of Traders report. Shorts gained +7 341 contracts, while speculative longs gained +8 365 contracts.
Crude oil is expected to confront tough resistance in the $75.26-$76.58 range, while major support is projected around $71.59-$69.24.
Above views are of the author and not of the website kindly read disclaimer