Oil Tries To Settle Above $45.50Oil continues to move higher as crude inventories decline by 0.8 million barrels.
Oil Video 25.11.20.
Crude Inventories Decline By 0.8 Million Barrels
The recent API Crude Oil Stock Change report estimated that crude inventories increased by 3.8 million barrels. However, EIA Weekly Petroleum Status Report indicated that crude inventories decreased by 0.8 million barrels. The market typically pays more attention to EIA data so oil has just received another bullish catalyst.
75% of retail CFD investors lose money
According to EIA, gasoline inventories increased by 2.2 million barrels while distillate fuel inventories decreased by 1.4 million barrels. The increase in gasoline inventories shows that demand for gasoline remains under pressure, and it’s hard to expect material improvements on this front in the upcoming weeks due to the challenging situation with the virus in the U.S.
Interestingly, U.S. domestic oil production increased from 10.9 million barrels per day (bpd) to 11 million bpd. It remains to be seen whether U.S. production will be able to get far away from the 11 million bpd level.
EIA has recently stated that it did not expect that U.S. production would get significantly above this level, but EIA oil price forecasts are rather conservative. If oil manages to stay above the $45 level for several weeks, domestic producers may adjust their plans and boost production, which may put some pressure on prices.
The Weak Dollar Is Another Potential Catalyst That Can Boost Oil Prices
While oil is trading a multi-month highs, the American currency is heading towards yearly lows. In recent trading sessions, the U.S. dollar found itself under pressure due to expectations of dovish policy of the former Fed Chair Janet Yellen, who is Joe Biden’s pick for Treasury Secretary.
The weak dollar typically provides support to dollar-denominated commodities. If the U.S. dollar gets to yearly lows, it may gain additional downside momentum which will be bullish for oil.
At this point, the market sentiment is bullish, and oil traders are eager to push oil to new highs on each positive news. As long as the market continues to ignore near-term problems of the oil market, a weaker dollar should be able to boost oil prices.
For a look at all of today’s economic events, check out our economic calendar.