Commodity Market: US Crude Oil retreats as US oil inventories rise, surging COVID-19 cases threaten demand

After gaining more than 4% in the previous session, futures on US West Texas Intermediate Crude Oil edged lower on Thursday after US oil stocks unexpectedly rose, while surging new coronavirus cases pose a threat to demand.

“Volatility in energy remains elevated as traders grapple with short-term demand weakness from Delta variant concerns and expectations the crude deficits will last till the end of the year,” Edward Moya, senior analyst at OANDA, was quoted as saying by Reuters.

“Oil will struggle to recoup all of its losses until the trend of new curbs or restrictions starts to ease across Southeast Asia, Australia, and Europe,” he added.

Yesterday an official report by the US Energy Information Administration showed that crude oil inventories, excluding the Strategic Petroleum Reserve (SPR), had increased by 2.108 million barrels to 439.7 million barrels during the week ended on July 16th, snapping a streak of eight consecutive weeks of declines. In comparison, analysts on average had anticipated a drop by 4.466 million barrels.

On the other hand, US gasoline stocks decreased by 0.121 million barrels last week, or at a much slower pace compared to market expectations (a drop by 1.043 million barrels).

According to Citi analysts, the most relevant risk to market fundamentals remains a deterioration in demand outlook, stemming from new virus-related curbs.

“Only a really tremendous demand shortfall would tip the market balance into a surplus,” Citi noted.

On the supply side, OPEC+ members agreed to increase supply by 400,000 barrels per day from August through December.

As of 8:02 GMT on Thursday WTI Crude Oil Futures were edging down 0.24% to trade at $70.13 per barrel. WTI Crude Oil Futures have retreated 4.55% so far in July, following a 10.78% surge in June.

At the same time, Brent Oil Futures were edging down 0.33% on the day to trade at $71.98 per barrel. Brent Oil Futures have retreated 3.56% so far in July, following a 7.49% surge in June.

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

Central Pivot – $69.08
R1 – $71.73
R2 – $73.15
R3 – $75.80
R4 – $78.44

S1 – $67.66
S2 – $65.01
S3 – $63.59
S4 – $62.16

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

Central Pivot – $71.07
R1 – $73.49
R2 – $74.75
R3 – $77.17
R4 – $79.58

S1 – $69.81
S2 – $67.39
S3 – $66.13
S4 – $64.86