Oil Fails To Gain More Ground Despite Another Inventory Draw
Oil Video 19.08.20.
According to EIA, gasoline inventories decreased by 3.3 million barrels which is a bullish development as it indicates that demand for gasoline is rebounding. Meanwhile, distillate fuel inventories increased by 0.2 million barrels.
Imports remained mostly flat at 5.7 million barrels and did not have any major impact on inventory levels.
Importantly, U.S. domestic oil production remained flat at 10.7 million barrels per day. While WTI oil has been trading firmly above the $40 level since early August, U.S. oil companies do not hurry to increase their production levels.
The EIA report highlighted the continued decrease in inventories which is bullish for oil. The U.S. domestic oil production fails to rebound even with stable pricing near $40 which means that U.S. producers will likely wait for higher prices before increasing their production levels.
This picture is rather bullish for oil but it remains to be seen whether oil can manage to gain more upside momentum as traders are still worried about the negative impact of coronavirus-related restrictions on oil demand in the upcoming months.
OPEC+ Meeting Is Underway
Today, OPEC+ countries meet to discuss the implementation of the production cut deal. No surprises are expected, and OPEC+ members will likely focus on compliance by those countries which have previously failed to cut their production in line with their quotas.
While no big news are expected, traders will still keep a close eye on any commentary from OPEC+ members after the meeting.
OPEC+ managed to stabilize the market. WTI oil has recently traded in the $42 – $43 range while Brent oil remained glued to the $45 level. However, these levels are not sufficient enough to support budgets of most OPEC+ members, especially at lower production levels.
Thus, the market will be searching for any hint of additional support that can be provided by OPEC+. While additional production cuts are not an option, OPEC+ could hint that it will keep its current cuts for more months in order to reach a desired inventory level.
For a look at all of today’s economic events, check out our economic calendar.