Oil Tries To Gain More Momentum Above The $40 LevelOil continues to trade above the $40 level as positive data from China offsets worries about the second wave of the virus.
Oil Video 28.09.20.
The Number Of U.S. Drilling Rigs Rebounds After Hurricanes
It looks like U.S. oil producers are ready to increase their oil production. The latest Baker Hughes Rig Count report indicated that the number of U.S. drilling rigs increased from 255 to 261, while the number of rigs drilling for oil grew from 179 to 183.
For now, this report did not serve as a bearish catalyst for oil which continues to trade near the $40 level.
However, the increase in the number of drilling rigs should ultimately lead to an increase of oil production which may boost crude inventories if demand does not continue to rebound at a healthy pace.
Oil traders have doubts about the pace of oil demand recovery at times when the world still struggles to contain the pandemic. At the same time, oil is trading at low prices so a serious downside move will likely require additional negative catalysts.
Without such catalysts, oil should have a good chance to settle above the $40 level and get closer to August highs at $43.75.
Positive Data From China Offsets Worries About The Virus
Today, the world markets got a major boost from data from China which indicated that profits at the country’s industrial firms continued to grow.
This news helped offset the worries about the spread of coronavirus which may lead to a second wave of lockdowns and hurt the demand for oil.
At this point, it looks like oil traders do not believe in the second wave of lockdowns and view the current lockdown in Israel as an isolated case.
The key question for the market in the near term is whether inventories will continue to decline. If the current downside trend proves its strength, oil may record additional gains in the upcoming trading sessions.
There are no important economic reports scheduled to be released today, but traders will have a chance to take a look at the latest API Crude Oil Stock Change data on Tuesday.
The previous report was bullish, and another positive inventory report could provide material support to the oil market in the near term.
For a look at all of today’s economic events, check out our economic calendar.