Commodity Market: US Crude Oil extends gains ahead of OPEC’s JMMC meeting outcome, API reports sharp decline in oil inventories

Futures on US West Texas Intermediate Crude Oil extended gains from a day ago on Wednesday, after a report by the American Petroleum Institute (API) showed the largest drop in crude oil inventories in 11 months, while markets awaited the outcome from a meeting of the Joint Ministerial Monitoring Committee (JMMC) of OPEC+ later in the day.

According to API data, crude oil stocks in the United States dropped by 8.3 million barrels during the week ended July 10th, or considerably more than what analysts had expected (a drop by 2.1 million barrels). It has been the sharpest decrease in oil inventories since the week ended August 23rd 2019, indicating a recovery in fuel demand regardless of surging new COVID-19 infections across the majority of US states.

The official government report on crude oil inventories by the Energy Information Administration (EIA) is due out at 14:30 GMT today. The median analyst estimate points to a 2.275-million-barrel drop in US crude oil stocks during the week ended July 10th.

Meanwhile, on the supply side, oil markets are now expecting the outcome from the OPEC+ meeting in regard to oil production cuts.

“The market will be eager to see if deeper cuts will be rolled over for an additional month, or whether the group will stick to the original plan, and start trimming cuts,” ING Economics said in an investor note.

“Most indications suggest that it will be the latter, with more focus on compliance and compensatory cuts.”

OPEC+ agreed to slash oil production by the record 9.7 million barrels per day between May and July. Market players are waiting to see if those cuts will be extended beyond July, or if they will be eased to 7.7 million barrels per day.

As of 9:17 GMT on Wednesday WTI Crude Oil Futures were gaining 0.74% to trade at $40.83 per barrel, after touching an intraday high at $40.98, or a price level not seen since July 8th ($41.07). WTI Crude Futures have risen 0.65% so far this week, following two straight weeks of gains.

Brent Oil Futures were gaining 0.84% on the day to trade at $43.42 per barrel, after touching an intraday high at $43.56, or a price level not seen since July 6th ($43.68). Brent Oil Futures have risen 0.37% so far this week, following two consecutive weeks of gains.

Daily Pivot Levels (traditional method of calculation) – WTI Crude Oil Futures

Central Pivot – $40.06
R1 – $41.01
R2 – $41.50
R3 – $42.45
R4 – $43.41

S1 – $39.57
S2 – $38.62
S3 – $38.13
S4 – $37.65

Daily Pivot Levels (traditional method of calculation) – Brent Oil Futures

Central Pivot – $42.69
R1 – $43.55
R2 – $44.05
R3 – $44.91
R4 – $45.78

S1 – $42.19
S2 – $41.33
S3 – $40.83
S4 – $40.34

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