Commodity Market: US Crude Oil retreats on demand-related concerns ahead of API report on stockpiles

Futures on US West Texas Intermediate Crude Oil retreated on Tuesday following their rally a day earlier, as a new wave of COVID-19 infections and potentially tighter lockdowns in some parts of the globe added to market concerns that a pickup in fuel demand could stall.

Yesterday WTI Crude Futures soared over 2% and Brent Oil Futures gained 1.6% following upbeat manufacturing data prints from Asia, Europe and the United States, which indicated factory activity was recovering from the severe impact caused by the COVID-19 pandemic earlier.

“On the demand side, we had quite encouraging global manufacturing (data) … but there’s still quite a bit of evidence of the oil demand recovery stalling in quite a few markets with a resurgence of COVID-19,” Lachlan Shaw, head of commodity research at National Australia Bank, said.

Surging new COVID-19 infections added to prospects of reimposing tighter lockdowns, which would hurt a recovery in demand for fuel.

The latest data by the Center for Systems Science and Engineering at Johns Hopkins University showed total confirmed COVID-19 cases had already surpassed 18.294 million worldwide, with US cases now exceeding 4.717 million. Global death toll has surpassed 693,000.

The weekly report on US oil stockpiles by the American Petroleum Institute industry group is expected to be released at 8:30 GMT. A consensus of analyst estimates points to a 600,000-barrel increase in US gasoline inventories during the business week ended July 31st and an 800,000-barrel increase in US distillate inventories. At the same time, crude oil stocks probably dropped by 3.3 million barrels last week.

The official government report on US crude oil inventories by the Energy Information Administration (EIA) is due out at 14:30 GMT on Wednesday.

As of 9:25 GMT on Tuesday WTI Crude Oil Futures were retreating 0.64% to trade at $40.51 per barrel, while moving within a daily range of $40.44-$40.98. WTI Crude Futures rose 1.54% in July, which marked their third straight month of gains.

Brent Oil Futures were retreating 0.62% on the day to trade at $43.58 per barrel, while moving within a daily range of $43.54-$44.10. Brent Oil Futures rose 4.86% in July, which marked their fourth consecutive month of advance.

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

Central Pivot – $40.53
R1 – $41.46
R2 – $42.15
R3 – $43.08
R4 – $44.01

S1 – $39.84
S2 – $38.91
S3 – $38.22
S4 – $37.53

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

Central Pivot – $43.73
R1 – $44.56
R2 – $45.27
R3 – $46.10
R4 – $46.93

S1 – $43.02
S2 – $42.19
S3 – $41.48
S4 – $40.77