CRUDE OIL OUTLOOK:WTI crude oil fell 4.6% in two days amid virus and stimulus considerationsUS and Canada oil rig counts continue
CRUDE OIL OUTLOOK:
- WTI crude oil fell 4.6% in two days amid virus and stimulus considerations
- US and Canada oil rig counts continued to climb, in line with Baker Hughes
- Oil merchants eye Wednesday’s EIA knowledge, anticipating a 1.5-million-barrel rise in stockpiles this week
WTI crude oil costs fell for a second day to US$ 38.80, marking a two-day decline of 4.6%. The selloff was primarily on account of a speedy rise in international coronavirus infections and dwindling hopes for a US aid package deal earlier than the presidential election. Greater than 5 million new Covid-19 circumstances had been reported worldwide within the final 14 days, setting a brand new document for the reason that pandemic began early this yr (chart under).
A two-day climb within the DXY US Greenback index fueled by haven demand additionally weighed on commodity costs. BP’s chief government Bernard Looney mentioned in a digital discussion board on Monday that the second viral wave might have a larger-than-expected impression on international oil demand.
Falling crude oil costs echo prevailing ‘risk-off’ sentiment, which has additionally dragged the growth-linked Australian Greenback decrease. AUD/USD has fallen 2.3% to date this week, being one of many worst performing G10 currencies.
Worldwide Covid-19 new day by day circumstances
Supply: Google
In the meantime, a Baker Hughes report confirmed that the entire variety of lively oil rigs in North America continues to be rising (chart under), which can level to greater upstream provides. The variety of oil rigs within the Unite State elevated by 5 to 287, whereas Canada’s rig rely rose by Three to 83 within the week ending October 23rd. Nonetheless, the present rig rely stage nonetheless marks a pointy fall in comparison with identical time final yr on account of decrease demand.
Supply: Baker Hughes
Oil merchants may watch this Wednesday’s EIA stock experiences, anticipating a 1.5-million-barrel rise in US crude oil stockpiles. Oil costs have traditionally exhibited a adverse correlation with stock adjustments, and the previous 12 months’ knowledge will be considered on the chart under. A a lot higher-than-expected rise in inventories might exert downward strain on oil costs, and vice versa.
Supply: DailyFX
Within the medium time period, the US crude inventories have been trending decrease since July. This favorable development, nonetheless, was principally offset by a weakening demand outlook, which was evidenced by decrease refinery inputs, gasoline manufacturing and distillate gasoline manufacturing. At 488.1 million barrels, the present stage of US crude oil inventories continues to be about 11% above the 5-year common for this time of yr.
With out a substantial minimize in manufacturing, provide might proceed to outpace demand within the oil market amid an escalating second viral wave which will cool urge for food for vitality and gasoline.
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Technically, WTI crude oil costs failed once more to interrupt a key resistance on the US$ 41.00-41.50 space (highlighted on the chart under) and have entered into consolidative interval since. The near-term development seemed to be bearish-biased because the MACD indicator has possible shaped a “Loss of life Cross”. The worth has additionally damaged the 20-, 50- and 100- Day Easy Shifting Common (SMA) traces concurrently, opening the room for extra draw back potential. An instantaneous assist stage may very well be discovered at US$ 38.6 – the decrease Bollinger Band.
WTI Crude Oil Worth – Day by day Chart
IG Shopper Sentiment exhibits that 69% of retail merchants are net-long oil, versus 31% which might be net-short (chart under). In comparison with a day in the past, retail merchants have considerably elevated their lengthy positions (+24%) whereas shedding brief positions (-4%). In comparison with every week in the past, the variety of merchants net-long has elevated by 67% whereas the online brief facet has decreased by 38%. From a contrarian standpoint, a drastic change in retail merchants’ sentiment in direction of a long-side bias might infer additional weakening in crude oil costs.
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— Written by Margaret Yang, Strategist for DailyFX.com
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