Oil Price Fundamental Daily Forecast – Rising Inventory, Fears of Rising COVID-19 Cases Weighing on Prices

U.S. West Texas Intermediate and international-benchmark crude oil are under pressure on Wednesday on fears over fresh outbreaks of coronavirus infections, as well as industry and government reports that showed a build in U.S. inventories.

At 16:00 GMT, August WTI crude oil is trading $38.05, down $0.60 or -1.55% and August Brent crude oil is at $40.61, down $0.35 or -0.85%.

Record Spike in New COVID-19 Cases Weighs on Demand

New coronavirus infections hit record highs in six U.S. states on Tuesday, marking a rising tide of cases for a second consecutive week as most states moved forward with reopening their economies.

Meanwhile, to contain the spread of new virus outbreaks in Beijing, scores of flights were cancelled and schools shut.

Oversupply Continues to Weigh on Prices

Late Tuesday, the American Petroleum Institute (API) reported that U.S. crude oil inventories rose by 3.9 million barrels in the week to June 12 to 543.2 million barrels. Traders were expecting a decline of 152,000 barrels.

The API also reported that gasoline stocks rose by 4.3 million barrels and distillate fuel stockpiles, including diesel fuel and heating oil, rose by 919,000 barrels.

On Wednesday, the U.S. Energy Information Administration (EIA) said that U.S. crude inventories rose by 1.2 million barrels for the week-ended June 12. That compared with a forecast by analysts polled by S&P Global Platts for an average decline of 3.5 million barrels.

The EIA data also showed crude stocks at the Cushing, Oklahoma storage hub fell by about 2.6 million barrels for the week.

Gasoline supply fell by 1.7 million barrels, while distillate stockpiles were 1.4 million barrels lower. The S&P Global Platts survey had shown expectations for a supply decline of 2.2 million barrels for gasoline and an increase of 3.1 million barrels for distillate inventories.

Daily Forecast

Oil prices are actually being influenced by opposing fundamentals at this time, but the price action indicates the bears are winning, probably because of uncertainty. Buyers don’t like uncertainty so it’s easy to just take a profit and move to the sidelines.

Stimulus measures, firm demand for risky assets, production cuts – are helping to underpin the markets. Rising U.S. supply and a possible second wave of coronavirus infections are weighing on prices. Traders are beginning to fear another round of demand destruction caused by renewed restrictions and lockdowns.

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