Crude oil prices dropped at the last trading session of the week amid fears of a slow recovery in the global economy due to the viral attacks presently going on in the international market
What we know: At the time of drafting this report, Brent crude was down over 1% to trade at $43.11 a barrel, not forgetting the U.S based oil contract. U.S. West Texas Intermediate (WTI) crude futures (CLc1) dropping almost 2% in trading at $40.46 a barrel.
The macro also weighing on oil prices is the recent report coming to the U.S government data from the government data revealing U.S crude inventories gained by 4.3 million barrels last week, compared with an expected fall of 913,000 barrels.
That said, Crude oil prices are still on track for a second straight weekly gain, helped by hopes for a vaccine.
In an explanatory note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi in a keynote to Nairametrics spoke on key fundamentals pushing down oil prices as seen in its recent price action.
“It is hard to bid in the market this morning as the virus’ 3rd wave spread is ravaging the US and forcing tighter lockdown restriction.
“The oil market had a troubling day as the slide started on the IEA comment that demand will not recover until well into 2021. This was compounded by the huge divergence between the API stats earlier in the week.
“The Department of Energy (DOE) oil stocks total was an absolute shocker that saw oil sell off quickly. The DOE saw a large build rather than a huge draw as estimated earlier in the week by the API. This has all put to bed the vaccine-inspired short squeeze rally.”
What to expect; Oil traders look to buy dips ahead of the critical WTI 40 level on the OPEC + backstop, but a nervy trade with de-risking transpiring across the board in thinly traded markets.