The API inventory survey against all odds came in better than most oil traders and energy analysts had anticipated.
The API reported a drop in 8.587 million barrels of crude oil for the period ending July 31. That was far better than the 3.3 million barrel draw forecasted by selected energy analysts.
The size of the recent plunge in U.S oil stockpiles shows there could be enough energy demand to absorb the new increase in crude oil production starting this August by OPEC+.
In addition, Brent crude prices have continued to converge around the $44 per barrel supported by recent positive macros, coming from emerging markets, that showed signs of upward gains in manufacturing and business sentiments across these economies coupled with the recent bullish run at America’s equities market, assuring most oil traders that the worse is definitely over.
These as kept the price of crude ranging between the $40-$45 as oil traders are looking for clear macros about the world’s economic stability.
At one stage, crude oil prices surged to the highest level in nearly two weeks. However geopolitical risks such as the recent massive explosion near Lebanese capital increased fears among oil traders on concerns about Middle east oil supply routes.
Oil traders are indeed in a precarious situation, partly because there is no clear direction on where energy demand will go in the short term, and there are concerns for the medium and long-horizon too.
Although geopolitical uncertainty has now become the new norm, the price of Brent crude is expected to remain above the $40 support level in the next few weeks in spite of the resurgence of the COVID-19 pandemic.