Crude Oil Prices Susceptible to Near-Term Profit-Taking

Oil bulls are presently out of gas on reports showing a surprise gain in U.S Oil stockpiles, leading oil traders to ponder if the partial lockdown prevailing in major economic hubs around the world’s largest economy has squeezed energy demand momentarily.

It’s important to note that the present rollout of COVID-19 vaccines, curbed losses at the major oil benchmarks, as Brent crude futures dropped slightly by 0.35% to trade at $50.55 a barrel at 8.37 GMT, also the U.S based oil contract the West Texas Intermediate (WTI) crude futures dropped by 0.29%, to trade at $47.41 a barrel.

Recent data retrieved from the American Petroleum Institute revealed U.S Crude oil inventories gained by 2 million barrels in the week to December 11 printing about 495 million barrels, which led to some bullish bets closed on the bias many oil experts expected a draw of 1.9 million barrels.

Oil traders are now wary of going long in spite of the bullish run presently in play amid open concerns that the rollout of COVID-19 vaccines in combating the COVID-19 viral attacks might not be enough as recent data in the past few weeks show energy demand in the world’s largest economy is fast softening.

Such bias, keeps the black liquid hydrocarbon susceptible to near-term profit-taking in the near term, considering oil prices are rallying high in the past weeks with recent price action showing a pause in momentum, however, the medium and long-term macros for the crude oil market remain rock solid.

The endless effort by OPEC+ in reducing the global oil inventory levels prevailing at record levels would help support oil prices, and staying at least above $45/Barrel, on the account that global demand for energy recovers to pre-COVID-19 levels, possibly faster than expected thanks to the COVID-19 vaccine.

That said, my view on the black fossil market are, crude oil bears most likely taking the center stage in the near term, on the bias that the downward energy demand pressure in play across the emerged markets, might distort energy demand/supply rebalancing.