Brent crude price remained relatively stable this Thursday morning at London’s trading session. Brent crude was slightly lower at 0.02% to trade at $43.74, as of 5.59 GMT.
This is in spite of positive macros coming from the Energy Information Administration (EIA) report, showing a drop in U.S crude oil stockpiles. The low volatility in Brent crude was largely attributed to many oil traders staying on the sidelines due to rising caseloads of COVID-19 infections.
The Energy Information Administration recorded a 10.612 million-barrel draw in U.S crude oil inventories for the week ending July 24, its biggest since 2019.
Why this matters: Crude oil traders are trading at cautious parameters due to growing geopolitical uncertainty, coupled with the rapid rise in COVID-19 caseloads, especially in Asia and America. This would most likely keep the price of crude around the price band of $40-45 in the coming days.
AxiCorp’s Chief Global Market Strategist, Stephen Innes, explained to Nairametrics why oil traders are still on the sidelines in spite of a plunge in U.S oil stockpiles. He said:
“Oil prices have been trying to nudge higher after the biggest crude inventory draw since 2019. US crude oil inventories moved sharply lower during the week ended July 24. Still, the market’s relative non-paused reaction to the colossal beat on the EIA print was likely due to a report including a considerable fall in US imports.
“But the mild market response also suggests given how noisy this data set has been of late, that traders would rather wait before jumping for the inventory prints to flesh out a more convincing two to four-week trend.
“All the while, the bulls sit fingers crossed for a more consistent downward skew on gasoline stocks.
“The mild market reaction to a huge inventory draw suggests that the gasoline inventory glut is providing the poor eye candy.”
The global outlook on demand for crude oil still remains cloudy, based on the resurgence of the deadly virus causing negative disruption of economic activities around emerging and emerged markets. This is coupled with the easing of oil output cuts by OPEC+. These factors join to keep some oil traders on the sidelines.