Crude oil prices gained some ground at London’s trading session, despite a surprise surge in U.S. crude oil inventories. This was revealed in a report credited to the Energy Information Administration.
Brent crude gained 0.45% about to trade at $44.49 a barrel by 8.07 am; also, the West Texas Intermediate gained 0.14%, to $42.11 a barrel.
U.S crude inventories gained about 4.9 million barrels in the week to July 17 to 536.6 million barrels, compared with expectations in a Reuter’s poll for a 2.1 million-barrel drop. Production rose to 11.1 million barrels per day, up by 100,000 barrels per day.
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“Normally inventories of fuel would be heavily drawn upon, but the surge in COVID-19 case numbers has stymied the recovery,” ANZ said, referring to usual demand during the peak U.S. summer driving season.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, spoke about the economic factors keeping the price of crude oil relatively stable. He said:
“Oil prices are stabilizing towards the top side of recent ranges as the US dollar weakens, despite crude stocks rising against expectations.
“When the dollar falls, good things happen, and many other things take off, none more so than global stock markets and commodities in general.
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“Given how fast the global oil market is moving back to balance, traders had thought the previous week’s inventory data could have pointed to the start of a declining trend.
“However, the latest data shows we are not out completely of the woods just yet. Generally, it is best not to put too much emphasis on a single week’s inventory report as both the API and EIA prints are a notoriously noisy data set.”
However, the energy market is likely to take direction from a consumer confidence report expected from Europe in a few hours’ time.