Corona Virus
Stay Safe, FollowGuidance
Fetching Location Data…
James Hyerczyk
Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Friday after a steep fall the previous session changed the main trend to down on the daily chart. Nonetheless, the markets were able to bounce back throughout the session, finishing just under four-month highs.

Despite the late volatility, the markets remain on track to post solid monthly gains, mostly benefiting from a weaker U.S. Dollar which continued to be hit by concerns over the recovery of the U.S. economy as the coronavirus ravages economic output. A falling dollar tends to increase foreign demand for dollar denominated crude oil.

Know where WTI Crude Oil is headed? Take advantage now with 

75% of retail CFD investors lose money

At 12:59 GMT, September WTI crude oil is trading $40.37, up $0.45 or +1.13% and December Brent crude oil is at $44.12, up $0.18 or +0.41%.

The price action toward the end of the week clearly shows that investors are becoming more concerned about demand.

Oil Set for Fragile Recovery as Economies Limp Towards Normal:  Reuters Poll

A Reuters poll released on Friday showed that oil prices are set for a slow crawl upward this year as the gradual easing of coronavirus-led restrictions buoy demand, while a potential second COVID-19 wave could slow the pace of recovery.

The survey of 43 analysts and economists forecast benchmark Brent crude to average $41.50 a barrel in 2020, up slightly from the $40.41 consensus in last month’s survey and compared with around $42 average for the benchmark thus far this year. It is expected to average $49.85 in 2021.

The 2020 outlook for West Texas Intermediate rose to $37.51 per barrel from June’s $36.10.

The poll projected global demand to contract by between 7.2 and 8.5 million barrels per day (bpd) this year, versus last month’s 6.5-8.7 million bpd prediction. The International Energy Agency raised its 2020 demand forecast earlier this month to 92.1 bpd.


Short-Term Outlook

Prices could remain essentially rangebound over the near-term until major strides are made on the demand side of the crude oil equation. On the supply side, things seem to be moving in the right direction with the extension of the OPEC+ production cuts although they are expected to be tapered from August 1 until the end of the year.

The problem is with the demand side where uncertainty rages over whether the re-opening of the global economy will be impeded.

It seems the development of a successful vaccine against coronavirus may be necessary to fast-track an economic recovery and in turn boost oil prices. Without a vaccine, the recovery is likely to be rocky, leading to a series of stops and starts in the next crude oil rally.

Until traders are convinced the recovery in the global economy will be faster and stronger than expected, it’s going to be hard to build a case for a breakout to the upside and the start of a prolonged rally.

For a look at all of today’s economic events, check out our economic calendar.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.