Oil Glut Concerns and Rising COVID-19 Cases Dampens Crude Oil Bulls

Brent oil futures was up slightly 0.21% to trade at $43.17  by 9.44 GMT ,while the West Texas Intermediate futures gained by 0.02% to $40.63.

The American Petroleum Institute (API) earlier released a report that about 2 million-barrel build in crude oil stockpiles for the week that finished July 3, much higher than the draw of 3.7 million barrels predicted by energy experts

The American Petroleum Institute also disclosed 8.16 million-barrel draw the previous week.

Oil traders growing concern that oil gluts in the fragile global economy were strengthened as the increasing COVID-19 caseloads will dampen global demand for energy products. Almost 12 million cases have been reported around the world as of July 8, data seen from Johns Hopkins University.

In addition, OPEC+ production cuts are scheduled to expire by July ending, although there are plans for additional smaller crude oil output cuts to remain in place through the end of 2020.

“The supply-side of the equation is well appreciated as OPEC+ continues to crusade to tighten the oil market. And the anticipated rebound in US curtailments has taken a setback hindered in the Bakken by the Dakota Access line’s closure. After all, it should be clear that OPEC will do what it can to reassure markets and support oil prices.” Stephen Innes, Chief Global Market Strategist at AxiCorp said in a note.

However, what these means is that we could see the price of Crude oil breaking its strong support levels back below the $40 in Brent, more especially if the resurgence of the virus is not curtailed coupled with the fact that many oil traders are watching the crude oil inventory numbers cautiously, along with the implied demand for crude oil in gauging if the energy market is saturated.